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TPX vs. RH: Which Stock Is the Better Value Option?

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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 companies is the best option for those looking for undervalued stocks? Let's 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 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 sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that TPX has an improving earnings outlook. However, value investors will care about much more than just this.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.

TPX currently has a forward P/E ratio of 16.02, while RH has a forward P/E of 27.52. We also note that TPX has a PEG ratio of 1.04. 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 2.99.

Another notable valuation metric for TPX is its P/B ratio of 18.02. 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, RH has a P/B of 317.62.

Based on these metrics and many more, TPX holds a Value grade of B, while RH has a Value grade of C.

TPX has seen stronger estimate revision activity and sports more attractive valuation metrics than RH, so it seems like value investors will conclude that TPX is the superior option right now.


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

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