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 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, both Hibbett Sports and Dick's Sporting Goods are holding a Zacks Rank of # 1 (Strong Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. However, value investors will care about much more than just this.
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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
HIBB currently has a forward P/E ratio of 10.55, while DKS has a forward P/E of 13.02. We also note that HIBB has a PEG ratio of 0.86. 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. DKS currently has a PEG ratio of 2.28.
Another notable valuation metric for HIBB is its P/B ratio of 1.36. 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 2.31.
These are just a few of the metrics contributing to HIBB's Value grade of A and DKS's 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.