DKS or ULTA: what’s the best value right now? – October 6, 2021



Retail Investors – Various stocks have likely encountered both Dick’s Sporting Goods (DKS Free Report) and Ulta Beauty (ULTA Free report). But which of these two companies is the best option for those looking for undervalued stocks? Let’s take a closer look.

Everyone has their own methods of finding high value opportunities, but our model includes pairing an impressive score in the Value category of our style scoring 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 characteristics.

Dick’s Sporting Goods and Ulta Beauty both have a Zacks # 1 (strong buy) rating right now. Investors should feel comfortable knowing that these two stocks have an improving earnings outlook as the Zacks Rank favors companies that have witnessed positive revisions in analyst estimates. But that’s just one factor that interests value investors.

Value investors also tend to look at a number of traditional and proven numbers to help them find stocks they believe are undervalued at their current price levels.

Our Value category highlights undervalued companies by looking at a variety of key metrics including popular P / E ratio, as well as P / S ratio, earnings performance, cash flow per share and a variety other fundamentals that have been used by value investors for years.

DKS currently has a forward P / E of 9.53, while ULTA has a forward P / E of 24.85. We also note that DKS has a PEG ratio of 0.75. This figure is similar to the commonly used P / E ratio, with the PEG ratio also taking into account the expected rate of profit growth of a company. ULTA currently has a PEG ratio of 1.91.

Another notable valuation metric for DKS is its P / N ratio of 3.48. The P / B ratio is used to compare the market value of a stock with its book value, which is defined as total assets minus total liabilities. For comparison, ULTA has a P / B of 10.81.

Based on these metrics and many others, DKS has a value rating of A, while ULTA has a value rating of D.

DKS and ULTA are impressive stocks with solid earnings prospects, but based on these valuation numbers, we believe DKS is the top value option right now.


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