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HELE vs. EL: Which Stock Is the Better Value Option?
Investors with an interest in Cosmetics stocks have likely encountered both Helen of Troy (HELE - Free Report) and Estee Lauder (EL - 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.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Helen of Troy has a Zacks Rank of #2 (Buy), while Estee Lauder has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that HELE likely has seen a stronger improvement to its earnings outlook than EL 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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
HELE currently has a forward P/E ratio of 11.92, while EL has a forward P/E of 51.60. We also note that HELE has a PEG ratio of 1.49. 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. EL currently has a PEG ratio of 5.36.
Another notable valuation metric for HELE is its P/B ratio of 1.83. 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, EL has a P/B of 17.92.
Based on these metrics and many more, HELE holds a Value grade of B, while EL has a Value grade of F.
HELE 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 HELE is likely the superior value option right now.