Back to top

Image: Bigstock

ODP vs. DKS: Which Stock Is the Better Value Option?

Read MoreHide Full Article

Investors interested in stocks from the Retail - Miscellaneous sector have probably already heard of ODP Corp. (ODP - Free Report) and Dick's Sporting Goods (DKS - 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.

Right now, ODP Corp. is sporting a Zacks Rank of #2 (Buy), while Dick's Sporting Goods has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that ODP likely has seen a stronger improvement to its earnings outlook than DKS has recently. But this is just one piece of the puzzle for value investors.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.

ODP currently has a forward P/E ratio of 5.23, while DKS has a forward P/E of 135. We also note that ODP has a PEG ratio of 0.76. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. DKS currently has a PEG ratio of 33.13.

Another notable valuation metric for ODP is its P/B ratio of 0.58. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, DKS has a P/B of 2.31.

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

ODP is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that ODP is likely the superior value option right now.


See More Zacks Research for These Tickers


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


The ODP Corporation (ODP) - free report >>

DICK'S Sporting Goods, Inc. (DKS) - free report >>

Published in