CBRL or SHAK: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Retail - Restaurants sector have probably already heard of Cracker Barrel Old Country Store (CBRL) and Shake Shack (SHAK). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
Cracker Barrel Old Country Store and Shake Shack are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that CBRL 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 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.
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.
CBRL currently has a forward P/E ratio of 40.16, while SHAK has a forward P/E of 49.44. We also note that CBRL has a PEG ratio of 0.93. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. SHAK currently has a PEG ratio of 6.12.
Another notable valuation metric for CBRL is its P/B ratio of 2.42. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, SHAK has a P/B of 4.16.
These are just a few of the metrics contributing to CBRL's Value grade of A and SHAK's Value grade of D.
CBRL sticks out from SHAK in both our Zacks Rank and Style Scores models, so value investors will likely feel that CBRL is the better option right now.
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See Stocks Now >>Cracker Barrel Old Country Store, Inc. (CBRL) : Free Stock Analysis Report
Shake Shack, Inc. (SHAK) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
