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.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Skechers and Nike are sporting Zacks Ranks of #1 (Strong Buy) and #4 (Sell), respectively, right now. 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. However, value investors will care about much more than just this.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.
SKX currently has a forward P/E ratio of 14.54, while NKE has a forward P/E of 28.12. We also note that SKX has a PEG ratio of 0.97. 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 2.16.
Another notable valuation metric for SKX is its P/B ratio of 2.17. 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, NKE has a P/B of 14.20.
These are just a few of the metrics contributing to SKX's Value grade of A and NKE's Value grade of F.
SKX is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that SKX is likely the superior value option right now.
Click to get this free report Skechers U.S.A., Inc. (SKX) : Free Stock Analysis Report NIKE, Inc. (NKE) : Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research