WSM vs. LOVE: Which Stock Should Value Investors Buy Now?
WSM vs. LOVE: Which Stock Is the Better Value Option?
Investors looking for stocks in the Retail - Home Furnishings sector might want to consider either Williams-Sonoma (WSM) or Lovesac (LOVE). 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 Williams-Sonoma and Lovesac are sporting a Zacks Rank of # 1 (Strong 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. However, value investors will care about much more than just this.
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.
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.
WSM currently has a forward P/E ratio of 11.87, while LOVE has a forward P/E of 50.47. We also note that WSM has a PEG ratio of 1.31. 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. LOVE currently has a PEG ratio of 1.44.
Another notable valuation metric for WSM is its P/B ratio of 7.97. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, LOVE has a P/B of 8.52.
These metrics, and several others, help WSM earn a Value grade of B, while LOVE has been given a Value grade of F.
Both WSM and LOVE are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that WSM is the superior value option right now.
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WilliamsSonoma, Inc. (WSM): Free Stock Analysis Report
The Lovesac Company (LOVE): Free Stock Analysis Report
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