Investors looking for stocks in the Retail - Restaurants sector might want to consider either BJ's Restaurants (BJRI) or Restaurant Brands (QSR). 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.
BJ's Restaurants has a Zacks Rank of #1 (Strong Buy), while Restaurant Brands has a Zacks Rank of #3 (Hold) right now. This means that BJRI's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
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.
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.
BJRI currently has a forward P/E ratio of 16.82, while QSR has a forward P/E of 18.76. We also note that BJRI has a PEG ratio of 1.20. 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. QSR currently has a PEG ratio of 2.15.
Another notable valuation metric for BJRI is its P/B ratio of 1.96. 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, QSR has a P/B of 4.7.
Based on these metrics and many more, BJRI holds a Value grade of A, while QSR has a Value grade of C.
BJRI stands above QSR thanks to its solid earnings outlook, and based on these valuation figures, we also feel that BJRI is the superior value option right now.
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BJ's Restaurants, Inc. (BJRI): Free Stock Analysis Report Restaurant Brands International Inc. (QSR): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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