BJ or HESAY: Which Is the Better Value Stock Right Now?

Investors with an interest in Consumer Products - Staples stocks have likely encountered both BJ's Wholesale Club (BJ) and Hermes International SA - Unsponsored ADR (HESAY). 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.

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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

BJ's Wholesale Club has a Zacks Rank of #2 (Buy), while Hermes International SA - Unsponsored ADR has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that BJ 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 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.

BJ currently has a forward P/E ratio of 24.99, while HESAY has a forward P/E of 56.63. We also note that BJ has a PEG ratio of 2.97. 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. HESAY currently has a PEG ratio of 7.52.

Another notable valuation metric for BJ is its P/B ratio of 7.2. 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, HESAY has a P/B of 15.87.

These metrics, and several others, help BJ earn a Value grade of B, while HESAY has been given a Value grade of F.

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

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

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