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WSM vs. TPX: Which Stock Is the Better Value Option?

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Investors interested in stocks from the Retail - Home Furnishings sector have probably already heard of Williams-Sonoma (WSM - Free Report) and Tempur Sealy (TPX - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Williams-Sonoma and Tempur Sealy are sporting Zacks Ranks of #2 (Buy) and #5 (Strong Sell), respectively, right now. This means that WSM's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture 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.

WSM currently has a forward P/E ratio of 19.61, while TPX has a forward P/E of 27.45. We also note that WSM has a PEG ratio of 1.96. 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. TPX currently has a PEG ratio of 2.19.

Another notable valuation metric for WSM is its P/B ratio of 4.16. 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, TPX has a P/B of 14.56.

These metrics, and several others, help WSM earn a Value grade of A, while TPX has been given a Value grade of D.

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


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Tempur Sealy International, Inc. (TPX) - free report >>

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