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FRAN vs. WWW: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
Ross Stores (ROST) has an impressive earnings surprise history and currently possesses the right combination of the two key ingredients for a likely beat in its next quarterly report.

Investors interested in Shoes and Retail Apparel stocks are likely familiar with Francesca's Holdings (FRAN) and Wolverine World Wide (WWW). 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.

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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Francesca's Holdings has a Zacks Rank of #2 (Buy), while Wolverine World Wide has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that FRAN has an improving earnings outlook. However, value investors will care about much more than just this.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.

FRAN currently has a forward P/E ratio of 12.97, while WWW has a forward P/E of 17.49. We also note that FRAN has a PEG ratio of 1.04. 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. WWW currently has a PEG ratio of 1.75.

Another notable valuation metric for FRAN is its P/B ratio of 2.52. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, WWW has a P/B of 3.59.

These are just a few of the metrics contributing to FRAN's Value grade of A and WWW's Value grade of D.

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


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Francesca's Holdings Corporation (FRAN) : Free Stock Analysis Report
 
Wolverine World Wide, Inc. (WWW) : Free Stock Analysis Report
 
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