Investors interested in stocks from the Retail - Miscellaneous sector have probably already heard of Hibbett Sports (HIBB - Free Report) and Dick's Sporting Goods (DKS - 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Currently, both Hibbett Sports and Dick's Sporting Goods are holding a Zacks Rank of # 1 (Strong Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one piece of the puzzle for value investors.
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.
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.
HIBB currently has a forward P/E ratio of 10.38, while DKS has a forward P/E of 13.38. We also note that HIBB has a PEG ratio of 0.85. 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. DKS currently has a PEG ratio of 2.35.
Another notable valuation metric for HIBB is its P/B ratio of 1.33. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, DKS has a P/B of 2.37.
Based on these metrics and many more, HIBB holds a Value grade of A, while DKS has a Value grade of C.
Both HIBB and DKS are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that HIBB is the superior value option right now.