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RL or LULU: Which Is the Better Value Stock Right Now?
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Investors with an interest in Textile - Apparel stocks have likely encountered both Ralph Lauren (RL - Free Report) and Lululemon (LULU - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Ralph Lauren is sporting a Zacks Rank of #2 (Buy), while Lululemon 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 RL is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.
RL currently has a forward P/E ratio of 15.24, while LULU has a forward P/E of 25.47. We also note that RL has a PEG ratio of 1. 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. LULU currently has a PEG ratio of 1.27.
Another notable valuation metric for RL is its P/B ratio of 4.24. 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, LULU has a P/B of 10.75.
These metrics, and several others, help RL earn a Value grade of B, while LULU has been given a Value grade of D.
RL sticks out from LULU in both our Zacks Rank and Style Scores models, so value investors will likely feel that RL is the better option right now.
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RL or LULU: Which Is the Better Value Stock Right Now?
Investors with an interest in Textile - Apparel stocks have likely encountered both Ralph Lauren (RL - Free Report) and Lululemon (LULU - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Ralph Lauren is sporting a Zacks Rank of #2 (Buy), while Lululemon 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 RL is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.
RL currently has a forward P/E ratio of 15.24, while LULU has a forward P/E of 25.47. We also note that RL has a PEG ratio of 1. 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. LULU currently has a PEG ratio of 1.27.
Another notable valuation metric for RL is its P/B ratio of 4.24. 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, LULU has a P/B of 10.75.
These metrics, and several others, help RL earn a Value grade of B, while LULU has been given a Value grade of D.
RL sticks out from LULU in both our Zacks Rank and Style Scores models, so value investors will likely feel that RL is the better option right now.