ARHS or ULTA: Which Is the Better Value Stock Right Now?
Investors with an interest in Retail - Miscellaneous stocks have likely encountered both Arhaus, Inc. (ARHS) and Ulta Beauty (ULTA). 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Both Arhaus, Inc. and Ulta Beauty have a Zacks Rank of # 2 (Buy) right now. 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 just one piece of the puzzle for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
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.
ARHS currently has a forward P/E ratio of 16.14, while ULTA has a forward P/E of 22.47. We also note that ARHS has a PEG ratio of 1.01. 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. ULTA currently has a PEG ratio of 1.63.
Another notable valuation metric for ARHS is its P/B ratio of 12.33. 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, ULTA has a P/B of 13.60.
Based on these metrics and many more, ARHS holds a Value grade of B, while ULTA has a Value grade of C.
Both ARHS and ULTA are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ARHS is the superior value option right now.
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