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PVH vs. LULU: Which Stock Should Value Investors Buy Now?

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Investors with an interest in Textile - Apparel stocks have likely encountered both PVH (PVH - Free Report) and Lululemon (LULU - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. 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, PVH is sporting a Zacks Rank of #1 (Strong Buy), while Lululemon has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that PVH likely has seen a stronger improvement to its earnings outlook than LULU has recently. 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 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.

PVH currently has a forward P/E ratio of 16.83, while LULU has a forward P/E of 49.10. We also note that PVH has a PEG ratio of 0.93. 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. LULU currently has a PEG ratio of 2.68.

Another notable valuation metric for PVH is its P/B ratio of 1.63. 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, LULU has a P/B of 16.38.

These metrics, and several others, help PVH earn a Value grade of B, while LULU has been given a Value grade of D.

PVH sticks out from LULU in both our Zacks Rank and Style Scores models, so value investors will likely feel that PVH is the better option right now.


In-Depth Zacks Research for the Tickers Above


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