Investors with an interest in Retail - Restaurants stocks have likely encountered both Chuy's Holdings (CHUY - Free Report) and Yum China Holdings (YUMC - 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.
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.
Chuy's Holdings and Yum China Holdings 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 just one factor that value investors are interested in.
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.
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.
CHUY currently has a forward P/E ratio of 22.58, while YUMC has a forward P/E of 25.22. We also note that CHUY has a PEG ratio of 1.29. 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. YUMC currently has a PEG ratio of 2.80.
Another notable valuation metric for CHUY is its P/B ratio of 2.15. 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, YUMC has a P/B of 5.67.
Based on these metrics and many more, CHUY holds a Value grade of B, while YUMC has a Value grade of C.
Both CHUY and YUMC are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CHUY is the superior value option right now.