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RL vs. VFC: Which Stock Is the Better Value Option?

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Investors interested in Textile - Apparel stocks are likely familiar with Ralph Lauren (RL - 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Both Ralph Lauren and V.F. have a Zacks Rank of # 2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. 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.

RL currently has a forward P/E ratio of 15.93, while VFC has a forward P/E of 20.59. We also note that RL has a PEG ratio of 1.54. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. VFC currently has a PEG ratio of 1.84.

Another notable valuation metric for RL is its P/B ratio of 2.51. 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 7.28.

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

Both RL and VFC are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that RL is the superior value option right now.


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