KR vs. WMT: Which Stock Should Value Investors Buy Now?
Investors with an interest in Retail - Supermarkets stocks have likely encountered both Kroger (KR) and Walmart (WMT). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Kroger has a Zacks Rank of #2 (Buy), while Walmart 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 KR 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 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.
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.
KR currently has a forward P/E ratio of 11.35, while WMT has a forward P/E of 25.49. We also note that KR has a PEG ratio of 2.57. 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. WMT currently has a PEG ratio of 3.92.
Another notable valuation metric for KR is its P/B ratio of 3.18. 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, WMT has a P/B of 5.37.
These are just a few of the metrics contributing to KR's Value grade of A and WMT's Value grade of C.
KR sticks out from WMT in both our Zacks Rank and Style Scores models, so value investors will likely feel that KR is the better option right now.
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The Kroger Co. (KR) : Free Stock Analysis Report
Walmart Inc. (WMT) : Free Stock Analysis Report
