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TSCO vs. FIVE: Which Stock Is the Better Value Option?

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Investors looking for stocks in the Retail - Miscellaneous sector might want to consider either Tractor Supply (TSCO - Free Report) or Five Below (FIVE - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, both Tractor Supply and Five Below are sporting a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is just one factor that value investors are interested in.

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.

TSCO currently has a forward P/E ratio of 18.41, while FIVE has a forward P/E of 39.33. We also note that TSCO has a PEG ratio of 1.39. 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. FIVE currently has a PEG ratio of 1.42.

Another notable valuation metric for TSCO is its P/B ratio of 6.72. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, FIVE has a P/B of 11.19.

These metrics, and several others, help TSCO earn a Value grade of A, while FIVE has been given a Value grade of D.

Both TSCO and FIVE are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that TSCO is the superior value option right now.


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