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PROPERTY:

9 luxury homes to consider if money is no object

Ever thought about what a multimillion pound budget would buy you?

BBQ vs. YUMC: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
·2-min read

Investors with an interest in Retail - Restaurants stocks have likely encountered both BBQ Holdings (BBQ) and Yum China Holdings (YUMC). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 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, BBQ Holdings is sporting a Zacks Rank of #2 (Buy), while Yum China Holdings has a Zacks Rank of #5 (Strong Sell). This means that BBQ'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.

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The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

BBQ currently has a forward P/E ratio of 9.17, while YUMC has a forward P/E of 62.08. We also note that BBQ has a PEG ratio of 0.65. 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. YUMC currently has a PEG ratio of 8.07.

Another notable valuation metric for BBQ is its P/B ratio of 1.79. 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, YUMC has a P/B of 2.64.

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

BBQ has seen stronger estimate revision activity and sports more attractive valuation metrics than YUMC, so it seems like value investors will conclude that BBQ is the superior option right now.


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BBQ Holdings, Inc. (BBQ) : Free Stock Analysis Report
 
Yum China (YUMC) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research