Investors with an interest in Textile - Apparel stocks have likely encountered both Ralph Lauren (RL) and V.F. (VFC). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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.
Ralph Lauren and V.F. are both sporting a Zacks Rank of # 2 (Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. 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.
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.
RL currently has a forward P/E ratio of 14.82, while VFC has a forward P/E of 21.51. We also note that RL has a PEG ratio of 1.44. 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. VFC currently has a PEG ratio of 1.89.
Another notable valuation metric for RL is its P/B ratio of 2.74. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, VFC has a P/B of 8.40.
Based on these metrics and many more, RL holds a Value grade of A, while VFC has a Value grade of C.
Both RL and VFC are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that RL is the superior value option right now.
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Ralph Lauren Corporation (RL) : Free Stock Analysis Report
V.F. Corporation (VFC) : Free Stock Analysis Report
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