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

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Investors looking for stocks in the Retail - Miscellaneous sector might want to consider either ODP Corp. (ODP - Free Report) or Tractor Supply (TSCO - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 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.

ODP Corp. has a Zacks Rank of #1 (Strong Buy), while Tractor Supply has a Zacks Rank of #3 (Hold) right now. This means that ODP's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

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 6.27, while TSCO has a forward P/E of 20.90. We also note that ODP has a PEG ratio of 0.92. 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. TSCO currently has a PEG ratio of 1.78.

Another notable valuation metric for ODP is its P/B ratio of 0.84. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, TSCO has a P/B of 8.67.

Based on these metrics and many more, ODP holds a Value grade of A, while TSCO has a Value grade of C.

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


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