Advertisement
Australia markets close in 5 hours 20 minutes

  • ALL ORDS

    7,847.80
    -89.70 (-1.13%)
     

  • ASX 200

    7,588.20
    -94.80 (-1.23%)
     

  • AUD/USD

    0.6527
    +0.0004 (+0.06%)
     

  • OIL

    83.85
    +0.28 (+0.34%)
     

  • GOLD

    2,341.00
    -1.50 (-0.06%)
     

  • Bitcoin AUD

    98,438.55
    -523.45 (-0.53%)
     

  • CMC Crypto 200

    1,388.44
    +5.86 (+0.42%)
     

  • AUD/EUR

    0.6081
    +0.0008 (+0.13%)
     

  • AUD/NZD

    1.0942
    -0.0016 (-0.15%)
     

  • NZX 50

    11,891.95
    -54.48 (-0.46%)
     

  • NASDAQ

    17,430.50
    -96.30 (-0.55%)
     

  • FTSE

    8,078.86
    +38.48 (+0.48%)
     

  • Dow Jones

    38,085.80
    -375.12 (-0.98%)
     

  • DAX

    17,917.28
    -171.42 (-0.95%)
     

  • Hang Seng

    17,284.54
    +83.27 (+0.48%)
     

  • NIKKEI 225

    37,667.62
    +39.14 (+0.10%)
     

WSM vs. TPX: Which Stock Is the Better Value Option?

Zacks Equity Research
·2-min read

Investors interested in stocks from the Retail - Home Furnishings sector have probably already heard of Williams-Sonoma (WSM) and Tempur Sealy (TPX). 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Williams-Sonoma and Tempur Sealy are sporting Zacks Ranks of #2 (Buy) and #5 (Strong Sell), respectively, right now. This means that WSM's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst 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.

ADVERTISEMENT

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.

WSM currently has a forward P/E ratio of 19.61, while TPX has a forward P/E of 27.45. We also note that WSM has a PEG ratio of 1.96. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. TPX currently has a PEG ratio of 2.19.

Another notable valuation metric for WSM is its P/B ratio of 4.16. 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, TPX has a P/B of 14.56.

These metrics, and several others, help WSM earn a Value grade of A, while TPX has been given a Value grade of D.

WSM sticks out from TPX in both our Zacks Rank and Style Scores models, so value investors will likely feel that WSM is the better option right now.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
WilliamsSonoma, Inc. (WSM) : Free Stock Analysis Report
 
Tempur Sealy International, Inc. (TPX) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.