Investors interested in Retail - Restaurants stocks are likely familiar with BJ's Restaurants (BJRI) and Compass Group PLC (CMPGY). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, BJ's Restaurants has a Zacks Rank of #1 (Strong Buy), while Compass Group PLC has a Zacks Rank of #4 (Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that BJRI is likely seeing its earnings outlook improve to a greater extent. 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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
BJRI currently has a forward P/E ratio of 23.10, while CMPGY has a forward P/E of 26.67. We also note that BJRI has a PEG ratio of 1.65. 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. CMPGY currently has a PEG ratio of 2.44.
Another notable valuation metric for BJRI is its P/B ratio of 2.34. 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, CMPGY has a P/B of 8.65.
These are just a few of the metrics contributing to BJRI's Value grade of B and CMPGY's Value grade of D.
BJRI stands above CMPGY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that BJRI is the superior value option right now.
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BJ's Restaurants, Inc. (BJRI) : Free Stock Analysis Report
Compass Group PLC (CMPGY) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
