Investors interested in stocks from the Cosmetics sector have probably already heard of Nu Skin Enterprises (NUS) and Estee Lauder (EL). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 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.
Nu Skin Enterprises and Estee Lauder are both sporting a Zacks Rank of # 1 (Strong Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is only part of the picture for value investors.
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.
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.
NUS currently has a forward P/E ratio of 17.84, while EL has a forward P/E of 30.97. We also note that NUS has a PEG ratio of 1.59. 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. EL currently has a PEG ratio of 2.49.
Another notable valuation metric for NUS is its P/B ratio of 4.65. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, EL has a P/B of 13.
These are just a few of the metrics contributing to NUS's Value grade of B and EL's Value grade of D.
Both NUS and EL are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that NUS is the superior value option right now.
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Nu Skin Enterprises, Inc. (NUS) : Free Stock Analysis Report
The Estee Lauder Companies Inc. (EL) : Free Stock Analysis Report
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