Investors with an interest in Retail - Discount Stores stocks have likely encountered both Dollar Tree (DLTR - Free Report) and Burlington Stores (BURL - 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.
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, both Dollar Tree and Burlington Stores are sporting a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one factor that value investors are interested in.
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.
DLTR currently has a forward P/E ratio of 17.03, while BURL has a forward P/E of 27.53. We also note that DLTR has a PEG ratio of 1.14. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. BURL currently has a PEG ratio of 1.52.
Another notable valuation metric for DLTR is its P/B ratio of 3.05. 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, BURL has a P/B of 101.14.
These are just a few of the metrics contributing to DLTR's Value grade of B and BURL's Value grade of D.
Both DLTR and BURL are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that DLTR is the superior value option right now.