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

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Investors looking for stocks in the Retail - Discount Stores sector might want to consider either Dollar General (DG - Free Report) or Burlington Stores (BURL - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Dollar General and Burlington Stores are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. This means that DG's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.

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.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

DG currently has a forward P/E ratio of 21.43, while BURL has a forward P/E of 28.48. We also note that DG has a PEG ratio of 1.67. 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 12.28.

Another notable valuation metric for DG is its P/B ratio of 9.43. 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 14.65.

These are just a few of the metrics contributing to DG's Value grade of B and BURL's Value grade of C.

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


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Dollar General Corporation (DG) - free report >>

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