Investors with an interest in Shoes and Retail Apparel stocks have likely encountered both Carter's (CRI) and Nike (NKE). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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, both Carter's and Nike are holding a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. However, value investors will care about much more than just this.
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.
CRI currently has a forward P/E ratio of 13.73, while NKE has a forward P/E of 30.79. We also note that CRI has a PEG ratio of 1.72. 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. NKE currently has a PEG ratio of 2.43.
Another notable valuation metric for CRI is its P/B ratio of 4.93. 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, NKE has a P/B of 15.58.
Based on these metrics and many more, CRI holds a Value grade of B, while NKE has a Value grade of D.
Both CRI and NKE are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CRI is the superior value option right now.
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Carter's, Inc. (CRI) : Free Stock Analysis Report
NIKE, Inc. (NKE) : Free Stock Analysis Report
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