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DKS or FIVE: Which Is the Better Value Stock Right Now?

Investors with an interest in Retail - Miscellaneous stocks have likely encountered both Dick's Sporting Goods (DKS) and Five Below (FIVE). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Dick's Sporting Goods and Five Below are both sporting 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 only part of the picture 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.

DKS currently has a forward P/E ratio of 10.27, while FIVE has a forward P/E of 39.68. We also note that DKS has a PEG ratio of 2.05. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. FIVE currently has a PEG ratio of 2.09.

Another notable valuation metric for DKS is its P/B ratio of 4.06. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, FIVE has a P/B of 8.53.

These are just a few of the metrics contributing to DKS's Value grade of A and FIVE's Value grade of C.

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

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DICK'S Sporting Goods, Inc. (DKS) : Free Stock Analysis Report

Five Below, Inc. (FIVE) : Free Stock Analysis Report

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Zacks Investment Research