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GPS or FIGS: 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 Gap (GPS - Free Report) and Figs (FIGS - 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Gap and Figs are sporting Zacks Ranks of #1 (Strong Buy) and #2 (Buy), respectively, right now. This means that GPS's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle 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.

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.

GPS currently has a forward P/E ratio of 19.42, while FIGS has a forward P/E of 78.96. We also note that GPS has a PEG ratio of 1.62. 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. FIGS currently has a PEG ratio of 4.12.

Another notable valuation metric for GPS is its P/B ratio of 2.28. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, FIGS has a P/B of 3.40.

Based on these metrics and many more, GPS holds a Value grade of A, while FIGS has a Value grade of D.

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


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