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

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Investors with an interest in Retail - Home Furnishings stocks have likely encountered both Williams-Sonoma (WSM - Free Report) and Lovesac (LOVE - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Williams-Sonoma and Lovesac are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, 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 just one factor that value investors are interested in.

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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

WSM currently has a forward P/E ratio of 16.56, while LOVE has a forward P/E of 191.95. We also note that WSM has a PEG ratio of 1.97. 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. LOVE currently has a PEG ratio of 5.48.

Another notable valuation metric for WSM is its P/B ratio of 7.59. 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 10.44.

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

WSM is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that WSM is likely the superior value option right now.


In-Depth Zacks Research for the Tickers Above


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

The Lovesac Company (LOVE) - free report >>

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