JSAIY vs. WMT: Which Stock Should Value Investors Buy Now?

Investors interested in stocks from the Retail - Supermarkets sector have probably already heard of J. Sainsbury PLC (JSAIY) and Walmart (WMT). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, J. Sainsbury PLC has a Zacks Rank of #2 (Buy), while Walmart has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that JSAIY 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 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.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

JSAIY currently has a forward P/E ratio of 12.44, while WMT has a forward P/E of 36.89. We also note that JSAIY has a PEG ratio of 3.48. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. WMT currently has a PEG ratio of 4.61.

Another notable valuation metric for JSAIY is its P/B ratio of 1.07. 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, WMT has a P/B of 8.48.

Based on these metrics and many more, JSAIY holds a Value grade of A, while WMT has a Value grade of C.

JSAIY has seen stronger estimate revision activity and sports more attractive valuation metrics than WMT, so it seems like value investors will conclude that JSAIY is the superior option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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