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BOJA vs. TXRH: Which Stock Is the Better Value Option?

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Investors looking for stocks in the Retail - Restaurants sector might want to consider either Bojangles or Texas Roadhouse (TXRH - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Bojangles has a Zacks Rank of #2 (Buy), while Texas Roadhouse has a Zacks Rank of #3 (Hold) right now. This means that BOJA's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

BOJA currently has a forward P/E ratio of 20.45, while TXRH has a forward P/E of 27.64. We also note that BOJA has a PEG ratio of 1.53. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. TXRH currently has a PEG ratio of 2.34.

Another notable valuation metric for BOJA is its P/B ratio of 1.87. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, TXRH has a P/B of 5.33.

These metrics, and several others, help BOJA earn a Value grade of A, while TXRH has been given a Value grade of C.

BOJA has seen stronger estimate revision activity and sports more attractive valuation metrics than TXRH, so it seems like value investors will conclude that BOJA is the superior option right now.


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