Investors with an interest in Textile - Apparel stocks have likely encountered both Ralph Lauren (RL - Free Report) and V.F. (VFC - 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Ralph Lauren has a Zacks Rank of #2 (Buy), while V.F. has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that RL is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
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 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.
RL currently has a forward P/E ratio of 15.60, while VFC has a forward P/E of 28.89. We also note that RL has a PEG ratio of 1.86. 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. VFC currently has a PEG ratio of 2.56.
Another notable valuation metric for RL is its P/B ratio of 3.22. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, VFC has a P/B of 8.34.
These are just a few of the metrics contributing to RL's Value grade of B and VFC's Value grade of D.
RL stands above VFC thanks to its solid earnings outlook, and based on these valuation figures, we also feel that RL is the superior value option right now.