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HBI vs. VFC: Which Stock Should Value Investors Buy Now?

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Investors with an interest in Textile - Apparel stocks have likely encountered both HanesBrands (HBI - Free Report) and V.F. (VFC - Free Report) . 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Right now, HanesBrands is sporting a Zacks Rank of #1 (Strong Buy), while V.F. has a Zacks Rank of #2 (Buy). This means that HBI's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

HBI currently has a forward P/E ratio of 12.19, while VFC has a forward P/E of 55.88. We also note that HBI has a PEG ratio of 3.69. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. VFC currently has a PEG ratio of 6.14.

Another notable valuation metric for HBI is its P/B ratio of 5.68. 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, VFC has a P/B of 9.78.

These are just a few of the metrics contributing to HBI's Value grade of B and VFC's Value grade of D.

HBI is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that HBI is likely the superior value option right now.


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