Back to top

Image: Bigstock

PLAY vs. SBUX: Which Stock Should Value Investors Buy Now?

Read MoreHide Full Article

Investors interested in Retail - Restaurants stocks are likely familiar with Dave & Buster's (PLAY - Free Report) and Starbucks (SBUX - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Dave & Buster's and Starbucks are sporting Zacks Ranks of #2 (Buy) and #5 (Strong Sell), respectively, right now. Investors should feel comfortable knowing that PLAY likely has seen a stronger improvement to its earnings outlook than SBUX has recently. But this is just one piece of the puzzle 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.

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.

PLAY currently has a forward P/E ratio of 18.61, while SBUX has a forward P/E of 21.53. We also note that PLAY has a PEG ratio of 1.25. 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. SBUX currently has a PEG ratio of 1.54.

Another notable valuation metric for PLAY is its P/B ratio of 4.59. 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, SBUX has a P/B of 17.53.

Based on these metrics and many more, PLAY holds a Value grade of B, while SBUX has a Value grade of D.

PLAY sticks out from SBUX in both our Zacks Rank and Style Scores models, so value investors will likely feel that PLAY is the better option right now.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Starbucks Corporation (SBUX) - free report >>

Dave & Buster's Entertainment, Inc. (PLAY) - free report >>