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FL vs. GOOS: Which Stock Is the Better Value Option?

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Zacks Equity Research
·2 min read
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Investors interested in Retail - Apparel and Shoes stocks are likely familiar with Foot Locker (FL) and Canada Goose (GOOS). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

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.

Currently, Foot Locker has a Zacks Rank of #2 (Buy), while Canada Goose has a Zacks Rank of #3 (Hold). This means that FL's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

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.

FL currently has a forward P/E ratio of 10.82, while GOOS has a forward P/E of 84.67. We also note that FL has a PEG ratio of 4.19. 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. GOOS currently has a PEG ratio of 9.96.

Another notable valuation metric for FL is its P/B ratio of 1.89. 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, GOOS has a P/B of 12.85.

These are just a few of the metrics contributing to FL's Value grade of A and GOOS's Value grade of F.

FL sticks out from GOOS in both our Zacks Rank and Style Scores models, so value investors will likely feel that FL is the better option right now.


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Zacks Investment Research