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TLYS or GPS: Which Is the Better Value Stock Right Now?

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Investors with an interest in Retail - Apparel and Shoes stocks have likely encountered both Tilly's (TLYS) and Gap (GPS). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, Tilly's has a Zacks Rank of #2 (Buy), while Gap has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that TLYS is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.

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.

TLYS currently has a forward P/E ratio of 12.67, while GPS has a forward P/E of 19.25. We also note that TLYS has a PEG ratio of 1.27. 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. GPS currently has a PEG ratio of 1.60.

Another notable valuation metric for TLYS is its P/B ratio of 2.87. 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, GPS has a P/B of 4.43.

Based on these metrics and many more, TLYS holds a Value grade of B, while GPS has a Value grade of C.

TLYS 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 TLYS is likely the superior value option right now.


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Tillys, Inc. (TLYS) : Free Stock Analysis Report
 
The Gap, Inc. (GPS) : Free Stock Analysis Report
 
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