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AAN vs. BBY: Which Stock Should Value Investors Buy Now?

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Investors looking for stocks in the Retail - Consumer Electronics sector might want to consider either Aaron's (AAN - Free Report) or Best Buy (BBY - 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.

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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Both Aaron's and Best Buy have a Zacks Rank of # 1 (Strong Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is just one factor that value investors are interested in.

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.

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.

AAN currently has a forward P/E ratio of 14.24, while BBY has a forward P/E of 19.10. We also note that AAN has a PEG ratio of 0.96. 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. BBY currently has a PEG ratio of 2.25.

Another notable valuation metric for AAN is its P/B ratio of 2.49. 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, BBY has a P/B of 7.65.

These are just a few of the metrics contributing to AAN's Value grade of A and BBY's Value grade of C.

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


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