Investors looking for stocks in the Shoes and Retail Apparel sector might want to consider either Wolverine World Wide (WWW - Free Report) or 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.
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 and Steven Madden are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, 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 also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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 18.40, while SHOO has a forward P/E of 20.21. We also note that WWW has a PEG ratio of 1.84. 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. SHOO currently has a PEG ratio of 1.89.
Another notable valuation metric for WWW is its P/B ratio of 3.68. 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.
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.