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ITOCY vs. ULTA: Which Stock Is the Better Value Option?

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Investors interested in Retail - Miscellaneous stocks are likely familiar with Itochu Corp. (ITOCY) and Ulta Beauty (ULTA). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, Itochu Corp. is sporting a Zacks Rank of #2 (Buy), while Ulta Beauty has a Zacks Rank of #3 (Hold). This means that ITOCY's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.

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.

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.

ITOCY currently has a forward P/E ratio of 6.81, while ULTA has a forward P/E of 20.34. We also note that ITOCY has a PEG ratio of 0.44. 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. ULTA currently has a PEG ratio of 1.98.

Another notable valuation metric for ITOCY is its P/B ratio of 1.10. 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, ULTA has a P/B of 13.32.

These are just a few of the metrics contributing to ITOCY's Value grade of A and ULTA's Value grade of C.

ITOCY 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 ITOCY is likely the superior value option right now.

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Itochu Corp. (ITOCY) : Free Stock Analysis Report
Ulta Beauty Inc. (ULTA) : Free Stock Analysis Report
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