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DG vs. COST: Which Stock Should Value Investors Buy Now?
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Investors interested in stocks from the Retail - Discount Stores sector have probably already heard of Dollar General (DG - Free Report) and Costco (COST - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, both Dollar General and Costco are holding a Zacks Rank of # 2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is just one piece of the puzzle 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.
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.
DG currently has a forward P/E ratio of 17.63, while COST has a forward P/E of 32.82. We also note that DG has a PEG ratio of 1.53. 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. COST currently has a PEG ratio of 3.61.
Another notable valuation metric for DG is its P/B ratio of 7.48. 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, COST has a P/B of 9.53.
These metrics, and several others, help DG earn a Value grade of B, while COST has been given a Value grade of C.
Both DG and COST are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that DG is the superior value option right now.
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DG vs. COST: Which Stock Should Value Investors Buy Now?
Investors interested in stocks from the Retail - Discount Stores sector have probably already heard of Dollar General (DG - Free Report) and Costco (COST - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, both Dollar General and Costco are holding a Zacks Rank of # 2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is just one piece of the puzzle 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.
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.
DG currently has a forward P/E ratio of 17.63, while COST has a forward P/E of 32.82. We also note that DG has a PEG ratio of 1.53. 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. COST currently has a PEG ratio of 3.61.
Another notable valuation metric for DG is its P/B ratio of 7.48. 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, COST has a P/B of 9.53.
These metrics, and several others, help DG earn a Value grade of B, while COST has been given a Value grade of C.
Both DG and COST are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that DG is the superior value option right now.