BLMN Vs. WEN: Which Stock Should Value Investors Buy Now?

By Zacks Investment ResearchStock MarketsMar 09, 2020 11:40PM ET

www.investing.com/analysis/blmn-vs-wen-which-stock-should-value-investors-buy-now-200514768

BLMN Vs. WEN: Which Stock Should Value Investors Buy Now?

By Zacks Investment Research | Mar 09, 2020 11:40PM ET

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Investors looking for stocks in the Retail - Restaurants sector might want to consider either Bloomin' Brands (BLMN) or Wendy's (WEN). 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.

Bloomin' Brands has a Zacks Rank of #2 (Buy), while Wendy's has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that BLMN is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

BLMN currently has a forward P/E ratio of 7.42, while WEN has a forward P/E of 29.75. We also note that BLMN has a PEG ratio of 0.93. 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. WEN currently has a PEG ratio of 2.32.

Another notable valuation metric for BLMN is its P/B ratio of 6.60. The 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. By comparison, WEN has a P/B of 8.31.

These are just a few of the metrics contributing to BLMN's Value grade of A and WEN's Value grade of D.

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

Bloomin' Brands, Inc. (BLMN): Free Stock Analysis Report

The Wendy's Company (WEN): Free Stock Analysis Report

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BLMN Vs. WEN: Which Stock Should Value Investors Buy Now?

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