Investors looking for stocks in the Retail - Apparel and Shoes sector might want to consider either Genesco (GCO - Free Report) or Stitch Fix (SFIX - 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Genesco 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 GCO has an improving earnings outlook. But this is only part of the picture for value investors.
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.
GCO currently has a forward P/E ratio of 11.49, while SFIX has a forward P/E of 359.05. We also note that GCO has a PEG ratio of 2.30. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. SFIX currently has a PEG ratio of 15.96.
Another notable valuation metric for GCO is its P/B ratio of 1.25. 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, SFIX has a P/B of 6.59.
Based on these metrics and many more, GCO holds a Value grade of A, while SFIX has a Value grade of D.
GCO sticks out from SFIX in both our Zacks Rank and Style Scores models, so value investors will likely feel that GCO is the better option right now.