BIG vs. TJX: Which Stock Should Value Investors Buy Now?
Investors with an interest in Retail - Discount Stores stocks have likely encountered both Big Lots (BIG) and TJX (TJX). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Big Lots has a Zacks Rank of #2 (Buy), while TJX has a Zacks Rank of #4 (Sell) right now. This means that BIG's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle 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 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.
BIG currently has a forward P/E ratio of 6.83, while TJX has a forward P/E of 301.02. We also note that BIG has a PEG ratio of 3.21. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. TJX currently has a PEG ratio of 28.67.
Another notable valuation metric for BIG is its P/B ratio of 1.38. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, TJX has a P/B of 13.68.
These are just a few of the metrics contributing to BIG's Value grade of A and TJX's Value grade of C.
BIG is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that BIG is likely the superior value option right now.
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Big Lots, Inc. (BIG) : Free Stock Analysis Report
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