Investors interested in stocks from the Leisure and Recreation Products sector have probably already heard of Academy Sports and Outdoors, Inc. (ASO) and Pool Corp. (POOL). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Both Academy Sports and Outdoors, Inc. and Pool Corp. have a Zacks Rank of # 1 (Strong Buy) right now. 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 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 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.
ASO currently has a forward P/E ratio of 4.39, while POOL has a forward P/E of 22.13. We also note that ASO has a PEG ratio of 0.30. 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. POOL currently has a PEG ratio of 2.21.
Another notable valuation metric for ASO is its P/B ratio of 1.86. 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, POOL has a P/B of 13.84.
These metrics, and several others, help ASO earn a Value grade of A, while POOL has been given a Value grade of F.
Both ASO and POOL are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ASO is the superior value option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Academy Sports and Outdoors, Inc. (ASO) : Free Stock Analysis Report
Pool Corporation (POOL) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research