Investors looking for stocks in the Retail - Apparel and Shoes sector might want to consider either Genesco (GCO - Free Report) or Canada Goose (GOOS - 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.
Genesco and Canada Goose are both sporting a Zacks Rank of # 2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. 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.
GCO currently has a forward P/E ratio of 14.57, while GOOS has a forward P/E of 73.57. We also note that GCO has a PEG ratio of 1.94. 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. GOOS currently has a PEG ratio of 2.80.
Another notable valuation metric for GCO is its P/B ratio of 1.14. 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, GOOS has a P/B of 39.65.
Based on these metrics and many more, GCO holds a Value grade of A, while GOOS has a Value grade of F.
Both GCO and GOOS are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that GCO is the superior value option right now.