Investors with an interest in Consumer Products - Discretionary stocks have likely encountered both PCM (PCMI) and Luxottica (LUXTY). 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.
Currently, PCM has a Zacks Rank of #1 (Strong Buy), while Luxottica has a Zacks Rank of #5 (Strong Sell). Investors should feel comfortable knowing that PCMI likely has seen a stronger improvement to its earnings outlook than LUXTY has recently. 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 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.
PCMI currently has a forward P/E ratio of 10.75, while LUXTY has a forward P/E of 28.41. We also note that PCMI has a PEG ratio of 0.54. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. LUXTY currently has a PEG ratio of 5.61.
Another notable valuation metric for PCMI is its P/B ratio of 2.13. 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, LUXTY has a P/B of 4.88.
These metrics, and several others, help PCMI earn a Value grade of A, while LUXTY has been given a Value grade of D.
PCMI sticks out from LUXTY in both our Zacks Rank and Style Scores models, so value investors will likely feel that PCMI is the better option right now.
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PCM, Inc. (PCMI) : Free Stock Analysis Report
Luxottica Group, S.p.A. (LUXTY) : Free Stock Analysis Report
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