Back to top

DSW vs. SFIX: Which Stock Is the Better Value Option?

Read MoreHide Full Article

Investors looking for stocks in the Retail - Apparel and Shoes sector might want to consider either DSW (DSW - Free Report) or 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.

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.

DSW has a Zacks Rank of #1 (Strong Buy), while Stitch Fix has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that DSW likely has seen a stronger improvement to its earnings outlook than SFIX 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 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.

DSW currently has a forward P/E ratio of 18.55, while SFIX has a forward P/E of 190.18. We also note that DSW has a PEG ratio of 2.65. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. SFIX currently has a PEG ratio of 12.68.

Another notable valuation metric for DSW is its P/B ratio of 2.82. 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, SFIX has a P/B of 13.14.

These metrics, and several others, help DSW earn a Value grade of B, while SFIX has been given a Value grade of F.

DSW 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 DSW is likely the superior value option right now.




In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


DSW Inc. (DSW) - free report >>

Stitch Fix, Inc. (SFIX) - free report >>

More from Zacks Tale of the Tape

You May Like