Investors interested in stocks from the Leisure and Recreation Products sector have probably already heard of Callaway Golf (ELY - Free Report) and Yeti (YETI - 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.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Both Callaway Golf and Yeti have a Zacks Rank of # 2 (Buy) right now. 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 only part of the picture 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.
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.
ELY currently has a forward P/E ratio of 16.58, while YETI has a forward P/E of 25.43. We also note that ELY has a PEG ratio of 0.66. 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. YETI currently has a PEG ratio of 1.51.
Another notable valuation metric for ELY is its P/B ratio of 2.18. 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, YETI has a P/B of 36.70.
Based on these metrics and many more, ELY holds a Value grade of A, while YETI has a Value grade of C.
Both ELY and YETI are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ELY is the superior value option right now.