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RL vs. VFC: Which Stock Is the Better Value Option?

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Investors looking for stocks in the Textile - Apparel sector might want to consider either Ralph Lauren (RL - Free Report) or V.F. (VFC - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

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.

Currently, both Ralph Lauren and V.F. are holding a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one piece of the puzzle for value investors.

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.

RL currently has a forward P/E ratio of 17.32, while VFC has a forward P/E of 22.24. We also note that RL has a PEG ratio of 1.68. 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 1.96.

Another notable valuation metric for RL is its P/B ratio of 3.08. 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, VFC has a P/B of 8.68.

Based on these metrics and many more, RL holds a Value grade of A, while VFC has a 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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