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KTB vs. LULU: Which Stock Should Value Investors Buy Now?

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Investors interested in Textile - Apparel stocks are likely familiar with Kontoor Brands (KTB) and Lululemon (LULU). 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.

Kontoor Brands and Lululemon are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that KTB is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.

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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

KTB currently has a forward P/E ratio of 8.32, while LULU has a forward P/E of 38.06. We also note that KTB has a PEG ratio of 1.04. 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. LULU currently has a PEG ratio of 1.90.

Another notable valuation metric for KTB is its P/B ratio of 15.37. 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, LULU has a P/B of 16.63.

These metrics, and several others, help KTB earn a Value grade of A, while LULU has been given a Value grade of D.

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


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Kontoor Brands, Inc. (KTB) : Free Stock Analysis Report
 
lululemon athletica inc. (LULU) : Free Stock Analysis Report
 
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