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RCII vs. MCW: Which Stock Should Value Investors Buy Now?

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Investors interested in stocks from the Consumer Services - Miscellaneous sector have probably already heard of Rent-A-Center and Mister Car Wash (MCW - 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Right now, both Rent-A-Center and Mister Car Wash are sporting a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one factor that value investors are interested in.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.

RCII currently has a forward P/E ratio of 7.10, while MCW has a forward P/E of 39.15. We also note that RCII has a PEG ratio of 0.21. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. MCW currently has a PEG ratio of 1.06.

Another notable valuation metric for RCII is its P/B ratio of 3.83. 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, MCW has a P/B of 9.21.

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

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


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