Investors interested in Retail - Apparel and Shoes stocks are likely familiar with Boot Barn (BOOT - Free Report) and 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Boot Barn and Canada Goose are sporting Zacks Ranks of #1 (Strong Buy) and #2 (Buy), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that BOOT 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 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.
BOOT currently has a forward P/E ratio of 13.99, while GOOS has a forward P/E of 44.57. We also note that BOOT has a PEG ratio of 0.61. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. GOOS currently has a PEG ratio of 1.43.
Another notable valuation metric for BOOT is its P/B ratio of 2.10. 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, GOOS has a P/B of 21.43.
These metrics, and several others, help BOOT earn a Value grade of A, while GOOS has been given a Value grade of D.
BOOT has seen stronger estimate revision activity and sports more attractive valuation metrics than GOOS, so it seems like value investors will conclude that BOOT is the superior option right now.