CMPGY vs. BROS: Which Stock Is the Better Value Option?

Investors with an interest in Retail - Restaurants stocks have likely encountered both Compass Group PLC (CMPGY) and Dutch Bros (BROS). 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, Compass Group PLC has a Zacks Rank of #2 (Buy), while Dutch Bros has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that CMPGY likely has seen a stronger improvement to its earnings outlook than BROS has recently. But this is just one factor that value investors are interested in.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.

CMPGY currently has a forward P/E ratio of 19.80, while BROS has a forward P/E of 61.16. We also note that CMPGY has a PEG ratio of 1.73. 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. BROS currently has a PEG ratio of 1.98.

Another notable valuation metric for CMPGY is its P/B ratio of 6.41. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, BROS has a P/B of 9.97.

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

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

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research