BLMN or CAVA: Which Is the Better Value Stock Right Now?
Investors interested in Retail - Restaurants stocks are likely familiar with Bloomin' Brands (BLMN) and Cava Group (CAVA). 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Bloomin' Brands has a Zacks Rank of #1 (Strong Buy), while Cava Group 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 BLMN has an improving earnings outlook. But this is only part of the picture 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.
BLMN currently has a forward P/E ratio of 8.29, while CAVA has a forward P/E of 94.50. We also note that BLMN has a PEG ratio of 2.09. 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. CAVA currently has a PEG ratio of 4.01.
Another notable valuation metric for BLMN is its P/B ratio of 1.56. 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, CAVA has a P/B of 7.14.
Based on these metrics and many more, BLMN holds a Value grade of A, while CAVA has a Value grade of F.
BLMN has seen stronger estimate revision activity and sports more attractive valuation metrics than CAVA, so it seems like value investors will conclude that BLMN is the superior option right now.
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This article originally published on Zacks Investment Research (zacks.com).
