COTY vs. EWCZ: Which Stock Is the Better Value Option?
Investors interested in stocks from the Cosmetics sector have probably already heard of Coty (COTY) and European Wax Center, Inc. (EWCZ). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Coty and European Wax Center, Inc. are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that COTY is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.
COTY currently has a forward P/E ratio of 30.73, while EWCZ has a forward P/E of 44.48. We also note that COTY has a PEG ratio of 2.09. 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. EWCZ currently has a PEG ratio of 6.95.
Another notable valuation metric for COTY is its P/B ratio of 2.59. 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, EWCZ has a P/B of 8.62.
Based on these metrics and many more, COTY holds a Value grade of B, while EWCZ has a Value grade of F.
COTY sticks out from EWCZ in both our Zacks Rank and Style Scores models, so value investors will likely feel that COTY is the better option right now.
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Coty (COTY) : Free Stock Analysis Report
European Wax Center, Inc. (EWCZ) : Free Stock Analysis Report
