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RL vs. VFC: Which Stock Should Value Investors Buy Now?

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Investors with an interest in Textile - Apparel stocks have likely encountered both Ralph Lauren (RL - Free Report) and V.F. (VFC - Free Report) . 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 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.

Right now, both Ralph Lauren and V.F. are sporting a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is just one factor that value investors are interested in.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.

RL currently has a forward P/E ratio of 18.22, while VFC has a forward P/E of 23.08. We also note that RL has a PEG ratio of 1.79. 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. VFC currently has a PEG ratio of 2.03.

Another notable valuation metric for RL is its P/B ratio of 3.02. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, VFC has a P/B of 7.95.

These are just a few of the metrics contributing to RL's Value grade of B and VFC's Value grade of C.

Both RL and VFC are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that RL is the superior value option right now.


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