AEO or PPRUY: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Retail - Apparel and Shoes sector have probably already heard of American Eagle Outfitters (AEO) and Kering SA (PPRUY). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, American Eagle Outfitters has a Zacks Rank of #1 (Strong Buy), while Kering SA has a Zacks Rank of #5 (Strong Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that AEO has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
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.
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.
AEO currently has a forward P/E ratio of 14.69, while PPRUY has a forward P/E of 16.93. We also note that AEO has a PEG ratio of 0.68. 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. PPRUY currently has a PEG ratio of 3.65.
Another notable valuation metric for AEO is its P/B ratio of 2.53. 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, PPRUY has a P/B of 3.40.
These metrics, and several others, help AEO earn a Value grade of A, while PPRUY has been given a Value grade of D.
AEO stands above PPRUY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that AEO is the superior value option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
American Eagle Outfitters, Inc. (AEO) : Free Stock Analysis Report
Kering SA (PPRUY) : Free Stock Analysis Report
