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DLTR vs. BURL: Which Stock Is the Better Value Option?

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Zacks Equity Research
·2-min read
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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 companies is the best option for those looking for undervalued stocks? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Dollar Tree and Burlington Stores are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that DLTR's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.

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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

DLTR currently has a forward P/E ratio of 21.04, while BURL has a forward P/E of 88.74. We also note that DLTR has a PEG ratio of 2.01. 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. BURL currently has a PEG ratio of 52.82.

Another notable valuation metric for DLTR is its P/B ratio of 3.50. 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, BURL has a P/B of 25.94.

These are just a few of the metrics contributing to DLTR's Value grade of A and BURL's Value grade of D.

DLTR has seen stronger estimate revision activity and sports more attractive valuation metrics than BURL, so it seems like value investors will conclude that DLTR is the superior 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