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TSCO vs. FIVE: Which Stock Is the Better Value Option?


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Investors interested in Retail - Miscellaneous stocks are likely familiar with Tractor Supply (TSCO) and Five Below (FIVE). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.

Tractor Supply and Five Below are both sporting a Zacks Rank of # 2 (Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. However, value investors will care about much more than just this.

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 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.

TSCO currently has a forward P/E ratio of 21.35, while FIVE has a forward P/E of 53.30. We also note that TSCO has a PEG ratio of 1.67. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. FIVE currently has a PEG ratio of 1.90.

Another notable valuation metric for TSCO is its P/B ratio of 7.75. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, FIVE has a P/B of 15.23.

These metrics, and several others, help TSCO earn a Value grade of B, while FIVE has been given a Value grade of F.

Both TSCO and FIVE are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that TSCO is the superior value option right now.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Investing Ideas , Stocks
Referenced Symbols: TSCO , FIVE



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