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DG vs. TJX: Which Stock Is the Better Value Option?

Zacks Equity Research
·2-min read

Investors interested in stocks from the Retail - Discount Stores sector have probably already heard of Dollar General (DG) and TJX (TJX). 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.

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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, Dollar General has a Zacks Rank of #2 (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. But this is only part of the picture for value investors.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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 23.84, while TJX has a forward P/E of 81.86. We also note that DG has a PEG ratio of 1.93. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. TJX currently has a PEG ratio of 7.80.

Another notable valuation metric for DG is its P/B ratio of 6.70. 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, TJX has a P/B of 13.73.

These metrics, and several others, help DG earn a Value grade of B, while TJX has been given a Value grade of D.

DG has seen stronger estimate revision activity and sports more attractive valuation metrics than TJX, so it seems like value investors will conclude that DG is the superior 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