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TGT vs. COST: Which Stock Should Value Investors Buy Now?
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Investors interested in Retail - Discount Stores stocks are likely familiar with Target (TGT - Free Report) and Costco (COST - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Target is sporting a Zacks Rank of #2 (Buy), while Costco has a Zacks Rank of #3 (Hold). This means that TGT's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
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.
TGT currently has a forward P/E ratio of 15.32, while COST has a forward P/E of 39.73. We also note that TGT has a PEG ratio of 2.52. 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. COST currently has a PEG ratio of 3.75.
Another notable valuation metric for TGT is its P/B ratio of 4.07. 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, COST has a P/B of 11.83.
Based on these metrics and many more, TGT holds a Value grade of B, while COST has a Value grade of D.
TGT 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 TGT is likely the superior value option right now.
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TGT vs. COST: Which Stock Should Value Investors Buy Now?
Investors interested in Retail - Discount Stores stocks are likely familiar with Target (TGT - Free Report) and Costco (COST - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Target is sporting a Zacks Rank of #2 (Buy), while Costco has a Zacks Rank of #3 (Hold). This means that TGT's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
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.
TGT currently has a forward P/E ratio of 15.32, while COST has a forward P/E of 39.73. We also note that TGT has a PEG ratio of 2.52. 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. COST currently has a PEG ratio of 3.75.
Another notable valuation metric for TGT is its P/B ratio of 4.07. 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, COST has a P/B of 11.83.
Based on these metrics and many more, TGT holds a Value grade of B, while COST has a Value grade of D.
TGT 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 TGT is likely the superior value option right now.