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ODP vs. ULTA: Which Stock Is the Better Value Option?

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Investors interested in Retail - Miscellaneous stocks are likely familiar with Office Depot (ODP - Free Report) and Ulta Beauty (ULTA - 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Office Depot and Ulta Beauty are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that ODP likely has seen a stronger improvement to its earnings outlook than ULTA has recently. 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.

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.

ODP currently has a forward P/E ratio of 9.17, while ULTA has a forward P/E of 26.03. We also note that ODP has a PEG ratio of 0.53. 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. ULTA currently has a PEG ratio of 1.40.

Another notable valuation metric for ODP is its P/B ratio of 0.82. 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, ULTA has a P/B of 9.35.

Based on these metrics and many more, ODP holds a Value grade of A, while ULTA has a Value grade of C.

ODP stands above ULTA thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ODP is the superior value option right now.




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