Investors with an interest in Retail - Restaurants stocks have likely encountered both Carrols Restaurant Group (TAST - Free Report) and Chipotle Mexican Grill (CMG - 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Carrols Restaurant Group is sporting a Zacks Rank of #2 (Buy), while Chipotle Mexican Grill has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that TAST has an improving earnings outlook. However, value investors will care about much more than just this.
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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
TAST currently has a forward P/E ratio of 39.94, while CMG has a forward P/E of 52.03. We also note that TAST has a PEG ratio of 2. 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. CMG currently has a PEG ratio of 2.92.
Another notable valuation metric for TAST is its P/B ratio of 2.95. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, CMG has a P/B of 8.93.
Based on these metrics and many more, TAST holds a Value grade of A, while CMG has a Value grade of D.
TAST has seen stronger estimate revision activity and sports more attractive valuation metrics than CMG, so it seems like value investors will conclude that TAST is the superior option right now.