Back to top

Image: Bigstock

HELE or EL: Which Is the Better Value Stock Right Now?

Read MoreHide Full Article

Investors interested in stocks from the Cosmetics sector have probably already heard of Helen of Troy (HELE - Free Report) and Estee Lauder (EL - 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.

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 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.

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. However, value investors will care about much more than just this.

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.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

HELE currently has a forward P/E ratio of 13.60, while EL has a forward P/E of 50.87. We also note that HELE has a PEG ratio of 1.70. 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 5.54.

Another notable valuation metric for HELE is its P/B ratio of 1.74. 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 15.28.

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

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


See More Zacks Research for These Tickers


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


The Estee Lauder Companies Inc. (EL) - free report >>

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

Published in