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TGT vs. COST: Which Stock Is the Better Value Option?
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Investors with an interest in Retail - Discount Stores stocks have likely encountered both Target (TGT - Free Report) and 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.
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.
Target has a Zacks Rank of #2 (Buy), while Costco has a Zacks Rank of #3 (Hold) 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 try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
TGT currently has a forward P/E ratio of 12.77, while COST has a forward P/E of 28.56. We also note that TGT has a PEG ratio of 1.90. 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 2.81.
Another notable valuation metric for TGT is its P/B ratio of 3.28. 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, COST has a P/B of 7.34.
These are just a few of the metrics contributing to TGT's Value grade of A and COST's Value grade of C.
TGT stands above COST thanks to its solid earnings outlook, and based on these valuation figures, we also feel that TGT is the superior value option right now.
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TGT vs. COST: Which Stock Is the Better Value Option?
Investors with an interest in Retail - Discount Stores stocks have likely encountered both Target (TGT - Free Report) and 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.
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.
Target has a Zacks Rank of #2 (Buy), while Costco has a Zacks Rank of #3 (Hold) 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 try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
TGT currently has a forward P/E ratio of 12.77, while COST has a forward P/E of 28.56. We also note that TGT has a PEG ratio of 1.90. 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 2.81.
Another notable valuation metric for TGT is its P/B ratio of 3.28. 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, COST has a P/B of 7.34.
These are just a few of the metrics contributing to TGT's Value grade of A and COST's Value grade of C.
TGT stands above COST thanks to its solid earnings outlook, and based on these valuation figures, we also feel that TGT is the superior value option right now.