SKX vs. NKE: Which Stock Is the Better Value Option?
Investors interested in Shoes and Retail Apparel stocks are likely familiar with Skechers (SKX) and Nike (NKE). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, Skechers is sporting a Zacks Rank of #2 (Buy), while Nike has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that SKX has an improving earnings outlook. But this is just one factor that value investors are interested in.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.
SKX currently has a forward P/E ratio of 13.76, while NKE has a forward P/E of 28.07. We also note that SKX has a PEG ratio of 0.50. 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. NKE currently has a PEG ratio of 1.74.
Another notable valuation metric for SKX is its P/B ratio of 1.70. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, NKE has a P/B of 11.46.
These are just a few of the metrics contributing to SKX's Value grade of A and NKE's Value grade of D.
SKX sticks out from NKE in both our Zacks Rank and Style Scores models, so value investors will likely feel that SKX is the better option right now.
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Skechers U.S.A., Inc. (SKX) : Free Stock Analysis Report
NIKE, Inc. (NKE) : Free Stock Analysis Report
