Investors interested in stocks from the Retail - Apparel and Shoes sector have probably already heard of The Children's Place (PLCE - Free Report) and Stitch Fix (SFIX - 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.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, The Children's Place has a Zacks Rank of #1 (Strong Buy), while Stitch Fix has 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 PLCE has an improving earnings outlook. However, value investors will care about much more than just this.
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.
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.
PLCE currently has a forward P/E ratio of 14.78, while SFIX has a forward P/E of 94.22. We also note that PLCE has a PEG ratio of 1.85. 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. SFIX currently has a PEG ratio of 4.19.
Another notable valuation metric for PLCE is its P/B ratio of 5.30. 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, SFIX has a P/B of 8.17.
Based on these metrics and many more, PLCE holds a Value grade of B, while SFIX has a Value grade of C.
PLCE is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that PLCE is likely the superior value option right now.