Investors interested in stocks from the Retail - Restaurants sector have probably already heard of Cracker Barrel Old Country Store (CBRL - Free Report) and Darden Restaurants (DRI - 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, Cracker Barrel Old Country Store is sporting a Zacks Rank of #2 (Buy), while Darden Restaurants 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 CBRL has an improving earnings outlook. 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.
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.
CBRL currently has a forward P/E ratio of 19.44, while DRI has a forward P/E of 19.82. We also note that CBRL has a PEG ratio of 1.94. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. DRI currently has a PEG ratio of 1.96.
Another notable valuation metric for CBRL is its P/B ratio of 6.49. 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, DRI has a P/B of 6.51.
These are just a few of the metrics contributing to CBRL's Value grade of B and DRI's Value grade of C.
CBRL stands above DRI thanks to its solid earnings outlook, and based on these valuation figures, we also feel that CBRL is the superior value option right now.