雅虎香港財經 TGT vs. COST: Which Stock Is the Better Value Option?
Investors interested in stocks from the Retail - Discount Stores sector have probably already heard of Target (TGT) and Costco (COST). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Target has a Zacks Rank of #2 (Buy), while Costco has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that TGT has an improving earnings outlook. However, value investors will care about much more than just this.
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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
TGT currently has a forward P/E ratio of 17.39, while COST has a forward P/E of 44.66. We also note that TGT has a PEG ratio of 1.53. 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. COST currently has a PEG ratio of 4.71.
Another notable valuation metric for TGT is its P/B ratio of 5.61. 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, COST has a P/B of 15.30.
These metrics, and several others, help TGT earn a Value grade of A, while COST has been given a Value grade of C.
TGT sticks out from COST in both our Zacks Rank and Style Scores models, so value investors will likely feel that TGT is the better option right now.
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Target Corporation (TGT) : Free Stock Analysis Report
Costco Wholesale Corporation (COST) : Free Stock Analysis Report
