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WSM vs. LOVE: Which Stock Is the Better Value Option?

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Investors looking for stocks in the Retail - Home Furnishings sector might want to consider either Williams-Sonoma (WSM - Free Report) or 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.

Right now, Williams-Sonoma is sporting a Zacks Rank of #2 (Buy), while Lovesac has a Zacks Rank of #3 (Hold). 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 piece of the puzzle for value investors.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.

WSM currently has a forward P/E ratio of 15.60, while LOVE has a forward P/E of 86.80. We also note that WSM has a PEG ratio of 1.84. 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 2.48.

Another notable valuation metric for WSM is its P/B ratio of 10.33. 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, LOVE has a P/B of 10.80.

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

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.


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Williams-Sonoma, Inc. (WSM) - free report >>

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