LL vs. LOW: Which Stock Is the Better Value Option?
Investors with an interest in Building Products - Retail stocks have likely encountered both Lumber Liquidators Holdings (LL) and Lowe's (LOW). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, both Lumber Liquidators Holdings and Lowe's are holding a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings 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 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.
LL currently has a forward P/E ratio of 19.20, while LOW has a forward P/E of 19.25. We also note that LL has a PEG ratio of 0.70. 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. LOW currently has a PEG ratio of 1.19.
Another notable valuation metric for LL is its P/B ratio of 3.37. 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, LOW has a P/B of 28.03.
These metrics, and several others, help LL earn a Value grade of B, while LOW has been given a Value grade of C.
Both LL and LOW are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that LL is the superior value option right now.
Click to get this free report
Lumber Liquidators Holdings, Inc (LL): Free Stock Analysis Report
Lowes Companies, Inc. (LOW): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.