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COST or BURL: Which Is the Better Value Stock Right Now?

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Investors looking for stocks in the Retail - Discount Stores sector might want to consider either Costco (COST - Free Report) or Burlington Stores (BURL - 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.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. 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.

Costco and Burlington Stores are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that COST has an improving earnings outlook. But this is only part of the picture 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.

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.

COST currently has a forward P/E ratio of 35, while BURL has a forward P/E of 40.31. We also note that COST has a PEG ratio of 4.05. 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. BURL currently has a PEG ratio of 23.99.

Another notable valuation metric for COST is its P/B ratio of 7.93. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, BURL has a P/B of 21.45.

These are just a few of the metrics contributing to COST's Value grade of B and BURL's Value grade of D.

COST sticks out from BURL in both our Zacks Rank and Style Scores models, so value investors will likely feel that COST is the better option right now.


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Costco Wholesale Corporation (COST) - free report >>

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