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DG vs. TJX: Which Stock Should Value Investors Buy Now?

Zacks

Investors with an interest in Retail - Discount Stores stocks have likely encountered both 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, both Dollar General and TJX are sporting a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is only part of the picture for value investors.

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.

DG currently has a forward P/E ratio of 18.31, while TJX has a forward P/E of 21.24. We also note that DG has a PEG ratio of 1.35. 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. TJX currently has a PEG ratio of 1.95.

Another notable valuation metric for DG is its P/B ratio of 4.65. 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 12.46.

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

Both DG and TJX are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that DG is 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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