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HELE vs. LRLCY: Which Stock Should Value Investors Buy Now?

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Investors interested in stocks from the Cosmetics sector have probably already heard of Helen of Troy (HELE - Free Report) and LOreal SA (LRLCY - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Both Helen of Troy and LOreal SA 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 factor that value investors are interested in.

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.

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.

HELE currently has a forward P/E ratio of 19.19, while LRLCY has a forward P/E of 38.51. We also note that HELE has a PEG ratio of 2.40. 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. LRLCY currently has a PEG ratio of 7.

Another notable valuation metric for HELE is its P/B ratio of 4.62. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, LRLCY has a P/B of 6.43.

Based on these metrics and many more, HELE holds a Value grade of B, while LRLCY has a Value grade of F.

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


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Helen of Troy Limited (HELE) - free report >>

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