Back to top

Image: Bigstock

WSM vs. LOVE: Which Stock Should Value Investors Buy Now?

Read MoreHide Full Article

Investors interested in Retail - Home Furnishings stocks are likely familiar with Williams-Sonoma (WSM - Free Report) and Lovesac (LOVE - 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.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Williams-Sonoma has a Zacks Rank of #1 (Strong Buy), while Lovesac has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that WSM likely has seen a stronger improvement to its earnings outlook than LOVE has recently. But this is only part of the picture for value investors.

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.

WSM currently has a forward P/E ratio of 17.76, while LOVE has a forward P/E of 181.20. We also note that WSM has a PEG ratio of 2.11. 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. LOVE currently has a PEG ratio of 5.18.

Another notable valuation metric for WSM is its P/B ratio of 8.13. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, LOVE has a P/B of 9.86.

Based on these metrics and many more, WSM holds a Value grade of B, while LOVE has a Value grade of D.

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

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

WilliamsSonoma, Inc. (WSM) - free report >>

The Lovesac Company (LOVE) - free report >>

Published in