Investors looking for stocks in the Retail - Apparel and Shoes sector might want to consider either Nordstrom (JWN - Free Report) or BOOHOO GRP PLC (BHOOY - 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.
Currently, Nordstrom has a Zacks Rank of #2 (Buy), while BOOHOO GRP PLC has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that JWN likely has seen a stronger improvement to its earnings outlook than BHOOY has recently. However, value investors will care about much more than just this.
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.
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.
JWN currently has a forward P/E ratio of 11.70, while BHOOY has a forward P/E of 60.38. We also note that JWN has a PEG ratio of 1.95. 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. BHOOY currently has a PEG ratio of 2.28.
Another notable valuation metric for JWN is its P/B ratio of 7.28. 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, BHOOY has a P/B of 13.83.
Based on these metrics and many more, JWN holds a Value grade of B, while BHOOY has a Value grade of D.
JWN stands above BHOOY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that JWN is the superior value option right now.