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TGT or TJX: Which Is the Better Value Stock Right Now?

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Investors looking for stocks in the Retail - Discount Stores sector might want to consider either Target (TGT - Free Report) or TJX (TJX - 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Both Target and TJX have a Zacks Rank of # 2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is only part of the picture for value investors.

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.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

TGT currently has a forward P/E ratio of 19.91, while TJX has a forward P/E of 148.37. We also note that TGT has a PEG ratio of 2.34. 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. TJX currently has a PEG ratio of 14.13.

Another notable valuation metric for TGT is its P/B ratio of 6.48. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, TJX has a P/B of 14.35.

These metrics, and several others, help TGT earn a Value grade of B, while TJX has been given a Value grade of D.

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


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