Back to top

Image: Bigstock

TPX or RH: Which Is the Better Value Stock Right Now?

Read MoreHide Full Article

Investors with an interest in Retail - Home Furnishings stocks have likely encountered both Tempur Sealy (TPX - Free Report) and Restoration Hardware (RH - 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.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Tempur Sealy and Restoration Hardware are both sporting a Zacks Rank of # 1 (Strong Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one piece of the puzzle 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.

TPX currently has a forward P/E ratio of 20.36, while RH has a forward P/E of 22.81. We also note that TPX has a PEG ratio of 1.29. 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. RH currently has a PEG ratio of 2.48.

Another notable valuation metric for TPX is its P/B ratio of 18.93. 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, RH has a P/B of 263.40.

These metrics, and several others, help TPX earn a Value grade of B, while RH has been given a Value grade of C.

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


In-Depth Zacks Research for the Tickers Above


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


Tempur Sealy International, Inc. (TPX) - free report >>

RH (RH) - free report >>

Published in