Investors interested in stocks from the Shoes and Retail Apparel sector have probably already heard of Wolverine World Wide (WWW - Free Report) and Steven Madden (SHOO - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Wolverine World Wide has a Zacks Rank of #2 (Buy), while Steven Madden has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that WWW is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
WWW currently has a forward P/E ratio of 18.28, while SHOO has a forward P/E of 21.16. We also note that WWW has a PEG ratio of 1.83. 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 1.98.
Another notable valuation metric for WWW is its P/B ratio of 3.66. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, SHOO has a P/B of 4.
Based on these metrics and many more, WWW holds a Value grade of B, while SHOO has a Value grade of C.
WWW 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 WWW is likely the superior value option right now.