Investors with an interest in Textile - Apparel stocks have likely encountered both Columbia Sportswear (COLM) and Under Armour (UAA). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Columbia Sportswear has a Zacks Rank of #2 (Buy), while Under Armour has a Zacks Rank of #3 (Hold). This means that COLM's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
COLM currently has a forward P/E ratio of 22.51, while UAA has a forward P/E of 67.64. We also note that COLM has a PEG ratio of 2.52. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. UAA currently has a PEG ratio of 2.98.
Another notable valuation metric for COLM is its P/B ratio of 4.13. 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, UAA has a P/B of 5.07.
Based on these metrics and many more, COLM holds a Value grade of B, while UAA has a Value grade of D.
COLM stands above UAA thanks to its solid earnings outlook, and based on these valuation figures, we also feel that COLM is the superior value option right now.
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Columbia Sportswear Company (COLM) : Free Stock Analysis Report
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