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CRI vs. NKE: Which Stock Should Value Investors Buy Now?

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Investors looking for stocks in the Shoes and Retail Apparel sector might want to consider either Carter's (CRI) or 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.

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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Carter's has a Zacks Rank of #1 (Strong Buy), while Nike has a Zacks Rank of #2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that CRI is likely seeing its earnings outlook improve to a greater extent. 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.

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 14.49, while NKE has a forward P/E of 39.06. We also note that CRI has a PEG ratio of 0.69. 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. NKE currently has a PEG ratio of 2.56.

Another notable valuation metric for CRI is its P/B ratio of 4.24. 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, NKE has a P/B of 20.74.

These are just a few of the metrics contributing to CRI's Value grade of B and NKE's Value grade of F.

CRI stands above NKE thanks to its solid earnings outlook, and based on these valuation figures, we also feel that CRI is the superior value option right now.


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