Back to top

KR vs. WMT: Which Stock Should Value Investors Buy Now?

Read MoreHide Full Article

Investors looking for stocks in the Retail - Supermarkets sector might want to consider either Kroger (KR - Free Report) or Walmart (WMT - 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Kroger and Walmart are both sporting a Zacks Rank of # 2 (Buy) right now. 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 tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.

KR currently has a forward P/E ratio of 12.55, while WMT has a forward P/E of 20.97. We also note that KR has a PEG ratio of 1.85. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. WMT currently has a PEG ratio of 3.94.

Another notable valuation metric for KR is its P/B ratio of 2.99. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, WMT has a P/B of 3.70.

These metrics, and several others, help KR earn a Value grade of A, while WMT has been given a Value grade of C.

Both KR and WMT are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that KR is the superior value option right now.




In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


The Kroger Co. (KR) - free report >>

Walmart Inc. (WMT) - free report >>

More from Zacks Tale of the Tape

You May Like

Published in