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COTY or EL: Which Is the Better Value Stock Right Now?
Investors interested in Cosmetics stocks are likely familiar with Coty (COTY - Free Report) and Estee Lauder (EL - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. 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, Coty has a Zacks Rank of #2 (Buy), while Estee Lauder has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that COTY 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 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.
COTY currently has a forward P/E ratio of 31.55, while EL has a forward P/E of 48.69. We also note that COTY has a PEG ratio of 2.14. 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 5.30.
Another notable valuation metric for COTY is its P/B ratio of 2.68. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, EL has a P/B of 14.64.
Based on these metrics and many more, COTY holds a Value grade of B, while EL has a Value grade of D.
COTY sticks out from EL in both our Zacks Rank and Style Scores models, so value investors will likely feel that COTY is the better option right now.