Back to top

Image: Bigstock

DKS or ULTA: Which Is the Better Value Stock Right Now?

Read MoreHide Full Article

Investors with an interest in Retail - Miscellaneous stocks have likely encountered both Dick's Sporting Goods (DKS - Free Report) and Ulta Beauty (ULTA - 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Dick's Sporting Goods and Ulta Beauty are both sporting a Zacks Rank of # 1 (Strong Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. 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.

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.

DKS currently has a forward P/E ratio of 9.53, while ULTA has a forward P/E of 24.85. We also note that DKS has a PEG ratio of 0.75. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. ULTA currently has a PEG ratio of 1.91.

Another notable valuation metric for DKS is its P/B ratio of 3.48. 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, ULTA has a P/B of 10.81.

Based on these metrics and many more, DKS holds a Value grade of A, while ULTA has a Value grade of D.

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


See More Zacks Research for These Tickers


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


DICK'S Sporting Goods, Inc. (DKS) - free report >>

Ulta Beauty Inc. (ULTA) - free report >>

Published in