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

Zacks Equity Research
·2 mins read

Investors interested in stocks from the Retail - Apparel and Shoes sector have probably already heard of Foot Locker (FL) and The Children's Place (PLCE). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, Foot Locker has a Zacks Rank of #1 (Strong Buy), while The Children's Place has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that FL likely has seen a stronger improvement to its earnings outlook than PLCE has recently. However, value investors will care about much more than just this.

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.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

FL currently has a forward P/E ratio of 16.93, while PLCE has a forward P/E of 305.08. We also note that FL has a PEG ratio of 1.98. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. PLCE currently has a PEG ratio of 38.14.

Another notable valuation metric for FL is its P/B ratio of 1.29. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, PLCE has a P/B of 4.48.

These are just a few of the metrics contributing to FL's Value grade of B and PLCE's Value grade of C.

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


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Foot Locker, Inc. (FL) : Free Stock Analysis Report
 
The Childrens Place, Inc. (PLCE) : Free Stock Analysis Report
 
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