Investors looking for stocks in the Retail - Supermarkets sector might want to consider either Carrefour SA (CRRFY) or Walmart (WMT). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, Carrefour SA is sporting a Zacks Rank of #2 (Buy), while Walmart has a Zacks Rank of #3 (Hold). This means that CRRFY's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.
CRRFY currently has a forward P/E ratio of 8.68, while WMT has a forward P/E of 36.33. We also note that CRRFY has a PEG ratio of 0.79. 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. WMT currently has a PEG ratio of 4.60.
Another notable valuation metric for CRRFY is its P/B ratio of 0.76. 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, WMT has a P/B of 8.35.
These metrics, and several others, help CRRFY earn a Value grade of A, while WMT has been given a Value grade of C.
CRRFY has seen stronger estimate revision activity and sports more attractive valuation metrics than WMT, so it seems like value investors will conclude that CRRFY is the superior option right now.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
