Investors looking for stocks in the Consumer Products - Discretionary sector might want to consider either PCM (PCMI - Free Report) or Luxottica . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
Right now, PCM is sporting a Zacks Rank of #2 (Buy), while Luxottica has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that PCMI has an improving earnings outlook. But this is just one factor that value investors are interested in.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
PCMI currently has a forward P/E ratio of 8.03, while LUXTY has a forward P/E of 25.06. We also note that PCMI has a PEG ratio of 0.40. 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. LUXTY currently has a PEG ratio of 4.95.
Another notable valuation metric for PCMI is its P/B ratio of 1.47. 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, LUXTY has a P/B of 4.02.
Based on these metrics and many more, PCMI holds a Value grade of B, while LUXTY has a Value grade of C.
PCMI sticks out from LUXTY in both our Zacks Rank and Style Scores models, so value investors will likely feel that PCMI is the better option right now.