Investors interested in stocks from the Retail - Apparel and Shoes sector have probably already heard of Genesco (GCO) and Stitch Fix (SFIX). 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.
Currently, Genesco has a Zacks Rank of #1 (Strong Buy), while Stitch Fix has a Zacks Rank of #2 (Buy). Investors should feel comfortable knowing that GCO likely has seen a stronger improvement to its earnings outlook than SFIX has recently. But this is only part of the picture for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.
GCO currently has a forward P/E ratio of 11.95, while SFIX has a forward P/E of 91.07. We also note that GCO has a PEG ratio of 2.39. 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. SFIX currently has a PEG ratio of 4.05.
Another notable valuation metric for GCO is its P/B ratio of 1.15. 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, SFIX has a P/B of 7.91.
These are just a few of the metrics contributing to GCO's Value grade of A and SFIX's Value grade of C.
GCO has seen stronger estimate revision activity and sports more attractive valuation metrics than SFIX, so it seems like value investors will conclude that GCO is the superior option right now.
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Genesco Inc. (GCO) : Free Stock Analysis Report
Stitch Fix, Inc. (SFIX) : Free Stock Analysis Report
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