Investors interested in Retail - Restaurants stocks are likely familiar with BJ's Restaurants (BJRI) and Texas Roadhouse (TXRH). 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
BJ's Restaurants and Texas Roadhouse are both sporting a Zacks Rank of #2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is just one factor that value investors are interested in.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.
BJRI currently has a forward P/E ratio of 28.16, while TXRH has a forward P/E of 31.24. We also note that BJRI has a PEG ratio of 2.01. 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. TXRH currently has a PEG ratio of 2.05.
Another notable valuation metric for BJRI is its P/B ratio of 3.57. 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, TXRH has a P/B of 8.61.
These are just a few of the metrics contributing to BJRI's Value grade of B and TXRH's Value grade of D.
Both BJRI and TXRH are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that BJRI is the superior value option right now.
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