Investors interested in Retail - Apparel and Shoes stocks are likely familiar with Chico's FAS (CHS) and Stitch Fix (SFIX). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
Chico's FAS and Stitch Fix are both sporting a Zacks Rank of # 1 (Strong 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 just one factor that value investors are interested in.
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.
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.
CHS currently has a forward P/E ratio of 199.09, while SFIX has a forward P/E of 317.20. We also note that CHS has a PEG ratio of 13.27. 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 21.15.
Another notable valuation metric for CHS is its P/B ratio of 0.80. 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 5.88.
These metrics, and several others, help CHS earn a Value grade of B, while SFIX has been given a Value grade of F.
Both CHS and SFIX are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CHS is the superior value option right now.