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TGT vs. COST: Which Stock Is the Better Value Option?
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Investors looking for stocks in the Retail - Discount Stores sector might want to consider either Target (TGT - Free Report) or Costco (COST - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Target and Costco are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that TGT's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
TGT currently has a forward P/E ratio of 18.16, while COST has a forward P/E of 43.57. We also note that TGT has a PEG ratio of 1.26. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. COST currently has a PEG ratio of 5.02.
Another notable valuation metric for TGT is its P/B ratio of 8.32. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, COST has a P/B of 12.96.
Based on these metrics and many more, TGT holds a Value grade of B, while COST has a Value grade of C.
TGT has seen stronger estimate revision activity and sports more attractive valuation metrics than COST, so it seems like value investors will conclude that TGT is the superior option right now.
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TGT vs. COST: Which Stock Is the Better Value Option?
Investors looking for stocks in the Retail - Discount Stores sector might want to consider either Target (TGT - Free Report) or Costco (COST - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Target and Costco are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that TGT's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
TGT currently has a forward P/E ratio of 18.16, while COST has a forward P/E of 43.57. We also note that TGT has a PEG ratio of 1.26. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. COST currently has a PEG ratio of 5.02.
Another notable valuation metric for TGT is its P/B ratio of 8.32. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, COST has a P/B of 12.96.
Based on these metrics and many more, TGT holds a Value grade of B, while COST has a Value grade of C.
TGT has seen stronger estimate revision activity and sports more attractive valuation metrics than COST, so it seems like value investors will conclude that TGT is the superior option right now.