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

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Investors interested in Retail - Home Furnishings stocks are likely familiar with 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.

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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Both Tempur Sealy and Restoration Hardware have a Zacks Rank of # 2 (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 only part of the picture for value investors.

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 13.37, while RH has a forward P/E of 22.22. We also note that TPX has a PEG ratio of 0.42. 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. RH currently has a PEG ratio of 1.04.

Another notable valuation metric for TPX is its P/B ratio of 10.26. 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 57.01.

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.


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

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