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

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Investors interested in Retail - Apparel and Shoes stocks are likely familiar with Foot Locker (FL - Free Report) and Stitch Fix (SFIX - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Right now, Foot Locker is sporting a Zacks Rank of #2 (Buy), while Stitch Fix has a Zacks Rank of #3 (Hold). This means that FL's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst 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.

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.

FL currently has a forward P/E ratio of 10.83, while SFIX has a forward P/E of 106.39. We also note that FL has a PEG ratio of 1.45. 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. SFIX currently has a PEG ratio of 4.73.

Another notable valuation metric for FL is its P/B ratio of 2.25. 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 5.04.

These metrics, and several others, help FL earn a Value grade of A, while SFIX has been given a Value grade of D.

FL 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 FL is likely the superior value option right now.


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