Investors with an interest in Retail - Restaurants stocks have likely encountered both Bojangles (BOJA - Free Report) and Texas Roadhouse (TXRH - 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Currently, both Bojangles and Texas Roadhouse are holding a Zacks Rank of # 2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is only part of the picture 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.
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.
BOJA currently has a forward P/E ratio of 20.86, while TXRH has a forward P/E of 27.91. We also note that BOJA has a PEG ratio of 1.56. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. TXRH currently has a PEG ratio of 2.36.
Another notable valuation metric for BOJA is its P/B ratio of 1.92. 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, TXRH has a P/B of 5.38.
These metrics, and several others, help BOJA earn a Value grade of A, while TXRH has been given a Value grade of C.
Both BOJA and TXRH are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that BOJA is the superior value option right now.