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BJRI vs. SHAK: Which Stock Is the Better Value Option?

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Investors interested in stocks from the Retail - Restaurants sector have probably already heard of BJ's Restaurants (BJRI - Free Report) and Shake Shack (SHAK - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, BJ's Restaurants has a Zacks Rank of #2 (Buy), while Shake Shack has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that BJRI likely has seen a stronger improvement to its earnings outlook than SHAK has recently. But this is just one piece of the puzzle for value investors.

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 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.

BJRI currently has a forward P/E ratio of 24.23, while SHAK has a forward P/E of 74.71. We also note that BJRI has a PEG ratio of 1.59. 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. SHAK currently has a PEG ratio of 3.32.

Another notable valuation metric for BJRI is its P/B ratio of 3.82. 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, SHAK has a P/B of 7.

These metrics, and several others, help BJRI earn a Value grade of B, while SHAK has been given a Value grade of D.

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


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