Investors interested in Textile - Apparel stocks are likely familiar with Crocs (CROX) and Lululemon (LULU). 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Crocs and Lululemon are sporting Zacks Ranks of #1 (Strong 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 CROX 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 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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
CROX currently has a forward P/E ratio of 16.39, while LULU has a forward P/E of 39.39. We also note that CROX has a PEG ratio of 1.09. 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. LULU currently has a PEG ratio of 2.14.
Another notable valuation metric for CROX is its P/B ratio of 14.27. 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, LULU has a P/B of 17.42.
Based on these metrics and many more, CROX holds a Value grade of B, while LULU has a Value grade of F.
CROX stands above LULU thanks to its solid earnings outlook, and based on these valuation figures, we also feel that CROX is the superior value option right now.
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Crocs, Inc. (CROX) : Free Stock Analysis Report
lululemon athletica inc. (LULU) : Free Stock Analysis Report
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