Investors with an interest in Cosmetics stocks have likely encountered both Helen of Troy (HELE - Free Report) and Inter Parfums (IPAR - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Helen of Troy is sporting a Zacks Rank of #2 (Buy), while Inter Parfums has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that HELE likely has seen a stronger improvement to its earnings outlook than IPAR has recently. But this is just one factor that value investors are interested in.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
HELE currently has a forward P/E ratio of 16.43, while IPAR has a forward P/E of 36.16. We also note that HELE has a PEG ratio of 2.92. 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. IPAR currently has a PEG ratio of 2.95.
Another notable valuation metric for HELE is its P/B ratio of 3.53. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, IPAR has a P/B of 3.59.
These are just a few of the metrics contributing to HELE's Value grade of B and IPAR's Value grade of F.
HELE stands above IPAR thanks to its solid earnings outlook, and based on these valuation figures, we also feel that HELE is the superior value option right now.