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

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Investors interested in stocks from the Textile - Apparel sector have probably already heard of Ralph Lauren (RL - Free Report) and V.F. (VFC - Free Report) . 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.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores 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 traits.

Ralph Lauren and V.F. are both sporting 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 factor that value investors are interested in.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.

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

RL currently has a forward P/E ratio of 18.09, while VFC has a forward P/E of 23.08. We also note that RL has a PEG ratio of 1.76. 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 2.03.

Another notable valuation metric for RL is its P/B ratio of 2.98. 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 7.96.

These metrics, and several others, help RL earn a Value grade of B, while VFC has been given a Value grade of C.

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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