Investors looking for stocks in the Retail - Supermarkets sector might want to consider either Carrefour SA (CRRFY) or Walmart (WMT). But which of these two companies is the best option for those looking for undervalued stocks? 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 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.
Currently, Carrefour SA has a Zacks Rank of #2 (Buy), while Walmart has a Zacks Rank of #3 (Hold). This means that CRRFY's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst 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.
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.
CRRFY currently has a forward P/E ratio of 9.26, while WMT has a forward P/E of 22.80. We also note that CRRFY has a PEG ratio of 0.49. 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. WMT currently has a PEG ratio of 4.15.
Another notable valuation metric for CRRFY is its P/B ratio of 1.12. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, WMT has a P/B of 4.74.
These metrics, and several others, help CRRFY earn a Value grade of A, while WMT has been given a Value grade of C.
CRRFY has seen stronger estimate revision activity and sports more attractive valuation metrics than WMT, so it seems like value investors will conclude that CRRFY is the superior option right now.
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