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Ollie's Bargain Outlet Holdings, Inc. (OLLI) - free report >>
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Ollie's Bargain Outlet Holdings, Inc. (OLLI) - free report >>
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OLLI or RH: Which Is the Better Value Stock Right Now?
Investors with an interest in Consumer Products - Staples stocks have likely encountered both Ollie's Bargain Outlet (OLLI - Free Report) and RH (RH - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Ollie's Bargain Outlet and RH are sporting Zacks Ranks of #2 (Buy) and #5 (Strong Sell), respectively, right now. Investors should feel comfortable knowing that OLLI likely has seen a stronger improvement to its earnings outlook than RH has recently. 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 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.
OLLI currently has a forward P/E ratio of 22.11, while RH has a forward P/E of 22.63. We also note that OLLI has a PEG ratio of 1.01. 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. RH currently has a PEG ratio of 2.28.
Another notable valuation metric for OLLI is its P/B ratio of 2.59. 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, RH has a P/B of 7.77.
These are just a few of the metrics contributing to OLLI's Value grade of B and RH's Value grade of D.
OLLI has seen stronger estimate revision activity and sports more attractive valuation metrics than RH, so it seems like value investors will conclude that OLLI is the superior option right now.