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BIG vs. ROST: Which Stock Is the Better Value Option?

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Investors interested in Retail - Discount Stores stocks are likely familiar with Big Lots (BIG - Free Report) and Ross Stores (ROST - 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 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.

Big Lots and Ross Stores are sporting Zacks Ranks of #2 (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 BIG has an improving earnings outlook. But this is just one factor that value investors are interested in.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.

BIG currently has a forward P/E ratio of 6.80, while ROST has a forward P/E of 111.21. We also note that BIG has a PEG ratio of 0.82. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. ROST currently has a PEG ratio of 11.12.

Another notable valuation metric for BIG is its P/B ratio of 1.56. 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, ROST has a P/B of 13.33.

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

BIG sticks out from ROST in both our Zacks Rank and Style Scores models, so value investors will likely feel that BIG is the better option right now.


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