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DKS vs. ULTA: Which Stock Should Value Investors Buy Now?

Investors with an interest in Retail - Miscellaneous stocks have likely encountered both Dick's Sporting Goods (DKS) and Ulta Beauty (ULTA). 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.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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.

Both Dick's Sporting Goods and Ulta Beauty have a Zacks Rank of # 1 (Strong Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. However, value investors will care about much more than just this.

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.

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.

DKS currently has a forward P/E ratio of 10.68, while ULTA has a forward P/E of 27.29. We also note that DKS has a PEG ratio of 1.50. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ULTA currently has a PEG ratio of 1.65.

Another notable valuation metric for DKS is its P/B ratio of 3.27. 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, ULTA has a P/B of 9.86.

Based on these metrics and many more, DKS holds a Value grade of A, while ULTA has a Value grade of D.

Both DKS and ULTA are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that DKS is the superior value option right now.


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DICKS Sporting Goods, Inc. (DKS): Free Stock Analysis Report
 
Ulta Beauty Inc. (ULTA): Free Stock Analysis Report
 
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