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AEO or BURBY: Which Is the Better Value Stock Right Now?

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Investors with an interest in Retail - Apparel and Shoes stocks have likely encountered both American Eagle Outfitters (AEO - Free Report) and Burberry Group PLC (BURBY - 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.

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 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.

American Eagle Outfitters has a Zacks Rank of #2 (Buy), while Burberry Group PLC has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that AEO is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

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.

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.

AEO currently has a forward P/E ratio of 13.29, while BURBY has a forward P/E of 20.45. We also note that AEO has a PEG ratio of 1.15. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. BURBY currently has a PEG ratio of 1.72.

Another notable valuation metric for AEO is its P/B ratio of 1.87. 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, BURBY has a P/B of 5.31.

These are just a few of the metrics contributing to AEO's Value grade of A and BURBY's Value grade of C.

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


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American Eagle Outfitters, Inc. (AEO) - free report >>

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