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JILL or SFIX: Which Is the Better Value Stock Right Now?

Zacks Equity Research

Investors looking for stocks in the Retail - Apparel and Shoes sector might want to consider either J.Jill (JILL) or 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.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

J.Jill has a Zacks Rank of #2 (Buy), while Stitch Fix has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that JILL is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.

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.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

JILL currently has a forward P/E ratio of 9.91, while SFIX has a forward P/E of 70.75. We also note that JILL has a PEG ratio of 0.90. 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. SFIX currently has a PEG ratio of 3.14.

Another notable valuation metric for JILL is its P/B ratio of 0.55. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, SFIX has a P/B of 5.10.

These are just a few of the metrics contributing to JILL's Value grade of A and SFIX's Value grade of C.

JILL is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that JILL is likely the superior value option right now.


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