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CMPGY vs. CMG: Which Stock Is the Better Value Option?
Investors interested in Retail - Restaurants stocks are likely familiar with Compass Group PLC (CMPGY - Free Report) and Chipotle Mexican Grill (CMG - 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.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, Compass Group PLC is sporting a Zacks Rank of #2 (Buy), while Chipotle Mexican Grill has a Zacks Rank of #3 (Hold). This means that CMPGY's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.
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.
CMPGY currently has a forward P/E ratio of 23.18, while CMG has a forward P/E of 39.95. We also note that CMPGY has a PEG ratio of 1.18. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. CMG currently has a PEG ratio of 1.49.
Another notable valuation metric for CMPGY is its P/B ratio of 5.39. 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, CMG has a P/B of 20.25.
These are just a few of the metrics contributing to CMPGY's Value grade of B and CMG's Value grade of D.
CMPGY 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 CMPGY is likely the superior value option right now.