TSCDY vs. WMT: Which Stock Should Value Investors Buy Now?
Investors looking for stocks in the Retail - Supermarkets sector might want to consider either Tesco PLC (TSCDY) or Walmart (WMT). 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.
Tesco PLC and Walmart are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that TSCDY'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 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.
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.
TSCDY currently has a forward P/E ratio of 12.22, while WMT has a forward P/E of 25.57. We also note that TSCDY has a PEG ratio of 0.48. 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. WMT currently has a PEG ratio of 3.50.
Another notable valuation metric for TSCDY is its P/B ratio of 1.73. 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, WMT has a P/B of 5.19.
These metrics, and several others, help TSCDY earn a Value grade of A, while WMT has been given a Value grade of C.
TSCDY stands above WMT thanks to its solid earnings outlook, and based on these valuation figures, we also feel that TSCDY is the superior value option right now.
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Tesco PLC (TSCDY) : Free Stock Analysis Report
Walmart Inc. (WMT) : Free Stock Analysis Report
