Investors with an interest in Retail - Apparel and Shoes stocks have likely encountered both Urban Outfitters (URBN - Free Report) and Stitch Fix (SFIX - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's 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.
Currently, Urban Outfitters has a Zacks Rank of #1 (Strong Buy), while Stitch Fix 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 URBN is likely seeing its earnings outlook improve. But this is just one piece of the puzzle for value investors.
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 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 16.90, while SFIX has a forward P/E of 138.88. We also note that URBN has a PEG ratio of 1.41. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. SFIX currently has a PEG ratio of 9.26.
Another notable valuation metric for URBN is its P/B ratio of 3.35. 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, SFIX has a P/B of 6.80.
These metrics, and several others, help URBN earn a Value grade of A, while SFIX has been given a Value grade of D.
URBN is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that URBN is likely the superior value option right now.