Investors with an interest in Retail - Miscellaneous stocks have likely encountered both Dick's Sporting Goods (DKS) and Tractor Supply (TSCO). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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.

Dick's Sporting Goods and Tractor Supply are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that DKS has an improving earnings outlook. But this is just one factor that value investors are interested in.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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 15.22, while TSCO has a forward P/E of 25.52. We also note that DKS has a PEG ratio of 2.40. 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. TSCO currently has a PEG ratio of 2.82.

Another notable valuation metric for DKS is its P/B ratio of 5.99. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, TSCO has a P/B of 13.02.

Based on these metrics and many more, DKS holds a Value grade of B, while TSCO has a Value grade of C.

DKS stands above TSCO thanks to its solid earnings outlook, and based on these valuation figures, we also feel that DKS is the superior value option right now.

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DICK'S Sporting Goods, Inc. (DKS) : Free Stock Analysis Report

Tractor Supply Company (TSCO) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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