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ODP vs. RGS: Which Stock Is the Better Value Option?

Zacks Equity Research
Updated
Asbury Automotive (ABG) shares have started gaining and might continue moving higher in the near term, as indicated by solid earnings estimate revisions.

Investors looking for stocks in the Retail - Miscellaneous sector might want to consider either Office Depot (ODP) or Regis (RGS). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, both Office Depot and Regis are sporting a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. 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.

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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.

ODP currently has a forward P/E ratio of 9.63, while RGS has a forward P/E of 33.97. We also note that ODP has a PEG ratio of 0.56. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. RGS currently has a PEG ratio of 3.77.

Another notable valuation metric for ODP is its P/B ratio of 0.86. 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, RGS has a P/B of 1.96.

These are just a few of the metrics contributing to ODP's Value grade of A and RGS's Value grade of C.

Both ODP and RGS are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ODP is the superior value option right now.


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Office Depot, Inc. (ODP) : Free Stock Analysis Report
 
Regis Corporation (RGS) : Free Stock Analysis Report
 
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