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FL vs. JWN: Which Stock Should Value Investors Buy Now?

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Investors with an interest in Retail - Apparel and Shoes stocks have likely encountered both Foot Locker (FL - Free Report) and Nordstrom (JWN - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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.

Foot Locker and Nordstrom are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. This means that FL's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.

FL currently has a forward P/E ratio of 11.29, while JWN has a forward P/E of 28.62. We also note that FL has a PEG ratio of 2.83. 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. JWN currently has a PEG ratio of 4.77.

Another notable valuation metric for FL is its P/B ratio of 2.15. 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, JWN has a P/B of 32.06.

Based on these metrics and many more, FL holds a Value grade of B, while JWN has a Value grade of D.

FL has seen stronger estimate revision activity and sports more attractive valuation metrics than JWN, so it seems like value investors will conclude that FL is the superior option right now.


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