Back to top

Image: Bigstock

GES vs. GIL: Which Stock Is the Better Value Option?

Read MoreHide Full Article

Investors interested in stocks from the Textile - Apparel sector have probably already heard of Guess (GES - Free Report) and Gildan Activewear (GIL - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's 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 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.

Right now, Guess is sporting a Zacks Rank of #1 (Strong Buy), while Gildan Activewear has a Zacks Rank of #5 (Strong Sell). Investors should feel comfortable knowing that GES likely has seen a stronger improvement to its earnings outlook than GIL has recently. But this is only part of the picture for value investors.

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 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.

GES currently has a forward P/E ratio of 12.86, while GIL has a forward P/E of 16.12. We also note that GES has a PEG ratio of 0.73. 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. GIL currently has a PEG ratio of 2.31.

Another notable valuation metric for GES is its P/B ratio of 2.16. 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, GIL has a P/B of 2.90.

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

GES 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 GES is likely the superior value option right now.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Guess?, Inc. (GES) - free report >>

Gildan Activewear, Inc. (GIL) - free report >>

Published in