Investors looking for stocks in the Textile - Apparel sector might want to consider either Delta Apparel (DLA) or Duluth Holdings (DLTH). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Delta Apparel and Duluth Holdings are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that DLA has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
DLA currently has a forward P/E ratio of 11.74, while DLTH has a forward P/E of 27.90. We also note that DLA has a PEG ratio of 0.78. 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. DLTH currently has a PEG ratio of 1.12.
Another notable valuation metric for DLA is its P/B ratio of 0.89. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, DLTH has a P/B of 4.79.
These metrics, and several others, help DLA earn a Value grade of A, while DLTH has been given a Value grade of D.
DLA stands above DLTH thanks to its solid earnings outlook, and based on these valuation figures, we also feel that DLA is the superior value option right now.