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DLTR vs. BURL: Which Stock Is the Better Value Option?

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Investors interested in stocks from the Retail - Discount Stores sector have probably already heard of Dollar Tree (DLTR - Free Report) and Burlington Stores (BURL - 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, Dollar Tree is sporting a Zacks Rank of #2 (Buy), while Burlington Stores has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that DLTR is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

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.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

DLTR currently has a forward P/E ratio of 19.80, while BURL has a forward P/E of 26.72. We also note that DLTR has a PEG ratio of 1.27. 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. BURL currently has a PEG ratio of 3.11.

Another notable valuation metric for DLTR is its P/B ratio of 4.39. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, BURL has a P/B of 16.26.

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

DLTR has seen stronger estimate revision activity and sports more attractive valuation metrics than BURL, so it seems like value investors will conclude that DLTR is the superior option right now.


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Dollar Tree, Inc. (DLTR) - free report >>

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