Which stock offers the better value option?

Investors interested in retail and food service stocks have probably come across Compass Group PLC (CMPGY) and Chipotle Mexican Grill (CMG). But which of these two stocks currently offers investors the better opportunity for value appreciation? Let’s take a closer look.

Everyone has their own methods for finding great value opportunities, but our model combines an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, Compass Group PLC has a Zacks Rank of #2 (Buy), while Chipotle Mexican Grill has a Zacks Rank of #3 (Hold). This system places emphasis on companies that have seen positive earnings estimate revisions, so investors should feel confident that CMPGY’s earnings outlook is likely to improve on a larger scale. However, value investors will be interested in much more than just this.

Value investors also tend to use a set of traditional, tried-and-tested numbers to find stocks that they believe are undervalued at their current price levels.

The Style Score Value assessment incorporates a number of important fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and numerous other key statistics commonly used by value investors.

CMPGY currently has a forward P/E ratio of 24.03, while CMG has a forward P/E ratio of 52.08. We also note that CMPGY has a PEG ratio of 1.96. This popular number is similar to the widely used P/E ratio, but the PEG ratio also takes into account a company’s expected EPS growth rate. CMG currently has a PEG ratio of 2.30.

Another important valuation metric for CMPGY is its P/B ratio of 7.75. P/B is a method of comparing a stock’s market value to its book value, which is defined as total assets minus total liabilities. For comparison, CMG has a P/B of 23.56.

These are just some of the metrics that contribute to the B score for CMPGY and the F score for CMG.

CMPGY is experiencing stronger estimate revision activity and has more attractive valuation multiples than CMG, so value investors seem to be concluding that CMPGY is the better option at present.

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Compass Group PLC (CMPGY): Free Stock Analysis Report

Chipotle Mexican Grill, Inc. (CMG): Free Stock Analysis Report

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