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Investors with an interest in Retail - Supermarkets stocks have likely encountered both Tesco PLC (TSCDY) and 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.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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, Tesco PLC has a Zacks Rank of #2 (Buy), while Walmart has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that TSCDY is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
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.
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.
TSCDY currently has a forward P/E ratio of 13.44, while WMT has a forward P/E of 37.11. We also note that TSCDY has a PEG ratio of 1.79. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. WMT currently has a PEG ratio of 4.36.
Another notable valuation metric for TSCDY is its P/B ratio of 2.22. 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, WMT has a P/B of 7.83.
Based on these metrics and many more, TSCDY holds a Value grade of A, while WMT has a Value grade of D.
TSCDY sticks out from WMT in both our Zacks Rank and Style Scores models, so value investors will likely feel that TSCDY is the better option right now.
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Tesco PLC (TSCDY) : Free Stock Analysis Report
Walmart Inc. (WMT) : Free Stock Analysis Report