Investors interested in Retail - Apparel and Shoes stocks are likely familiar with Zumiez (ZUMZ) and Stitch Fix (SFIX). 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 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, both Zumiez and Stitch Fix are holding a Zacks Rank of # 1 (Strong Buy). 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 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.
ZUMZ currently has a forward P/E ratio of 12.10, while SFIX has a forward P/E of 324.27. We also note that ZUMZ has a PEG ratio of 1.01. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. SFIX currently has a PEG ratio of 21.62.
Another notable valuation metric for ZUMZ is its P/B ratio of 1.94. 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 6.01.
Based on these metrics and many more, ZUMZ holds a Value grade of B, while SFIX has a Value grade of D.
Both ZUMZ and SFIX are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ZUMZ is the superior value option right now.