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PERY vs. UAA: Which Stock Should Value Investors Buy Now?

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Investors interested in stocks from the Textile - Apparel sector have probably already heard of Perry Ellis and Under Armour (UAA - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, Perry Ellis has a Zacks Rank of #2 (Buy), while Under Armour 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 PERY is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.

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 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.

PERY currently has a forward P/E ratio of 14.37, while UAA has a forward P/E of 123.90. We also note that PERY has a PEG ratio of 4.79. 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. UAA currently has a PEG ratio of 5.99.

Another notable valuation metric for PERY is its P/B ratio of 1.12. 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, UAA has a P/B of 4.93.

These metrics, and several others, help PERY earn a Value grade of B, while UAA has been given a Value grade of D.

PERY 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 PERY is likely the superior value option right now.


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