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DLTR or BURL: Which Is the Better Value Stock Right Now?

Zacks Equity Research
·2-min read

Investors looking for stocks in the Retail - Discount Stores sector might want to consider either Dollar Tree (DLTR) or Burlington Stores (BURL). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Right now, both Dollar Tree and Burlington Stores 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 piece of the puzzle for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

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Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

DLTR currently has a forward P/E ratio of 20.97, while BURL has a forward P/E of 29.50. We also note that DLTR has a PEG ratio of 1.35. 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. BURL currently has a PEG ratio of 2.24.

Another notable valuation metric for DLTR is its P/B ratio of 4.83. 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, BURL has a P/B of 18.74.

These metrics, and several others, help DLTR earn a Value grade of B, while BURL has been given a Value grade of C.

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


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Dollar Tree, Inc. (DLTR) : Free Stock Analysis Report
 
Burlington Stores, Inc. (BURL) : Free Stock Analysis Report
 
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Zacks Investment Research