DG vs. TJX: Which Stock Should Value Investors Buy Now?
Investors interested in Retail - Discount Stores stocks are likely familiar with Dollar General (DG) and TJX (TJX). 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.
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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Dollar General and TJX are sporting Zacks Ranks of #2 (Buy) and #5 (Strong Sell), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that DG 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 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.
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.
DG currently has a forward P/E ratio of 21.77, while TJX has a forward P/E of 93.48. We also note that DG has a PEG ratio of 1.74. 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. TJX currently has a PEG ratio of 8.90.
Another notable valuation metric for DG is its P/B ratio of 6.75. 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 14.29.
Based on these metrics and many more, DG holds a Value grade of B, while TJX has a Value grade of D.
DG sticks out from TJX in both our Zacks Rank and Style Scores models, so value investors will likely feel that DG is the better option right now.
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Dollar General Corporation (DG) : Free Stock Analysis Report
The TJX Companies, Inc. (TJX) : Free Stock Analysis Report
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