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DG or TJX: Which Is the Better Value Stock Right Now?

Zacks Equity Research
·2-min read

Investors looking for stocks in the Retail - Discount Stores sector might want to consider either Dollar General (DG) or TJX (TJX). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, Dollar General is sporting a Zacks Rank of #1 (Strong Buy), while TJX has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that DG likely has seen a stronger improvement to its earnings outlook than TJX has recently. However, value investors will care about much more than just this.

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.

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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.

DG currently has a forward P/E ratio of 21.24, while TJX has a forward P/E of 77.69. We also note that DG has a PEG ratio of 1.73. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. TJX currently has a PEG ratio of 7.40.

Another notable valuation metric for DG is its P/B ratio of 6.56. 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, TJX has a P/B of 12.84.

These are just a few of the metrics contributing to DG's Value grade of B and TJX's Value grade of D.

DG is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that DG is likely the superior value option right now.


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Dollar General Corporation (DG) : Free Stock Analysis Report
 
The TJX Companies, Inc. (TJX) : Free Stock Analysis Report
 
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Zacks Investment Research