Investors looking for stocks in the Retail - Apparel and Shoes sector might want to consider either Nordstrom (JWN - Free Report) or Stitch Fix (SFIX - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.
Nordstrom and Stitch Fix are both sporting a Zacks Rank of # 2 (Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. However, value investors will care about much more than just this.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
JWN currently has a forward P/E ratio of 10.68, while SFIX has a forward P/E of 126.69. We also note that JWN has a PEG ratio of 1.78. 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. SFIX currently has a PEG ratio of 5.63.
Another notable valuation metric for JWN is its P/B ratio of 7.72. 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, SFIX has a P/B of 7.83.
These are just a few of the metrics contributing to JWN's Value grade of A and SFIX's Value grade of D.
Both JWN and SFIX are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that JWN is the superior value option right now.