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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 or YUMC: Which Is the Better Value Stock Right Now?

Zacks Equity Research
·2-min read

Investors interested in Retail - Restaurants stocks are likely familiar with BBQ Holdings (BBQ) and Yum China Holdings (YUMC). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.

Right now, BBQ Holdings is sporting a Zacks Rank of #2 (Buy), while Yum China Holdings has a Zacks Rank of #5 (Strong Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that BBQ has an improving earnings outlook. However, value investors will care about much more than just this.

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.

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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.

BBQ currently has a forward P/E ratio of 9.81, while YUMC has a forward P/E of 55.42. We also note that BBQ has a PEG ratio of 0.70. 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 7.20.

Another notable valuation metric for BBQ is its P/B ratio of 1.92. 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 2.36.

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

BBQ is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that BBQ is likely the superior value option right now.


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Zacks Investment Research