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URBN vs. BURBY: Which Stock Is the Better Value Option?

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Investors interested in stocks from the Retail - Apparel and Shoes sector have probably already heard of Urban Outfitters (URBN - Free Report) and Burberry Group PLC (BURBY - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Right now, Urban Outfitters is sporting a Zacks Rank of #2 (Buy), while Burberry Group PLC has a Zacks Rank of #5 (Strong Sell). Investors should feel comfortable knowing that URBN likely has seen a stronger improvement to its earnings outlook than BURBY has recently. 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.

URBN currently has a forward P/E ratio of 12.02, while BURBY has a forward P/E of 16.29. We also note that URBN has a PEG ratio of 0.67. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. BURBY currently has a PEG ratio of 4.29.

Another notable valuation metric for URBN is its P/B ratio of 1.77. 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, BURBY has a P/B of 4.43.

These metrics, and several others, help URBN earn a Value grade of A, while BURBY has been given a Value grade of C.

URBN stands above BURBY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that URBN is the superior value option right now.


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