ARHS vs. DKS: Which Stock Is the Better Value Option?

Investors interested in Retail - Miscellaneous stocks are likely familiar with Arhaus, Inc. (ARHS) and Dick's Sporting Goods (DKS). 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.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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, Arhaus, Inc. is sporting a Zacks Rank of #2 (Buy), while Dick's Sporting Goods has a Zacks Rank of #4 (Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ARHS is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.

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.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

ARHS currently has a forward P/E ratio of 14.94, while DKS has a forward P/E of 15.72. We also note that ARHS has a PEG ratio of 1.57. 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. DKS currently has a PEG ratio of 3.19.

Another notable valuation metric for ARHS is its P/B ratio of 2.56. 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, DKS has a P/B of 3.6.

These metrics, and several others, help ARHS earn a Value grade of A, while DKS has been given a Value grade of C.

ARHS sticks out from DKS in both our Zacks Rank and Style Scores models, so value investors will likely feel that ARHS is the better option right now.

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

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