Investors with an interest in Shoes and Retail Apparel stocks have likely encountered both Deckers (DECK - Free Report) and Steven Madden (SHOO - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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.
Both Deckers and Steven Madden have a Zacks Rank of #2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one piece of the puzzle for value investors.
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.
DECK currently has a forward P/E ratio of 18.54, while SHOO has a forward P/E of 19.59. We also note that DECK has a PEG ratio of 1.60. 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. SHOO currently has a PEG ratio of 1.84.
Another notable valuation metric for DECK is its P/B ratio of 3.32. 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, SHOO has a P/B of 3.82.
These metrics, and several others, help DECK earn a Value grade of A, while SHOO has been given a Value grade of D.
DECK and SHOO are both solid stocks with improving earnings outlooks, but based on the above valuation figures, it seems like value investors will conclude that DECK is the superior option right now.