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CMPGY vs. CAVA: Which Stock Is the Better Value Option?

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Investors with an interest in Retail - Restaurants stocks have likely encountered both Compass Group PLC (CMPGY - Free Report) and Cava Group (CAVA - 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.

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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, Compass Group PLC is sporting a Zacks Rank of #2 (Buy), while Cava Group has a Zacks Rank of #4 (Sell). This means that CMPGY's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.

CMPGY currently has a forward P/E ratio of 23.27, while CAVA has a forward P/E of 116.75. We also note that CMPGY has a PEG ratio of 1.93. 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. CAVA currently has a PEG ratio of 3.27.

Another notable valuation metric for CMPGY is its P/B ratio of 8.37. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, CAVA has a P/B of 9.97.

Based on these metrics and many more, CMPGY holds a Value grade of B, while CAVA has a Value grade of F.

CMPGY sticks out from CAVA in both our Zacks Rank and Style Scores models, so value investors will likely feel that CMPGY is the better option right now.


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