Investors with an interest in Retail - Apparel and Shoes stocks have likely encountered both Urban Outfitters (URBN) and Stitch Fix (SFIX). But which of these two companies is the best option for those looking for undervalued stocks? 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Urban Outfitters has a Zacks Rank of #2 (Buy), while Stitch Fix 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 URBN 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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
URBN currently has a forward P/E ratio of 13.56, while SFIX has a forward P/E of 818.63. We also note that URBN has a PEG ratio of 1.32. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. SFIX currently has a PEG ratio of 27.29.
Another notable valuation metric for URBN is its P/B ratio of 2.24. 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, SFIX has a P/B of 5.69.
Based on these metrics and many more, URBN holds a Value grade of A, while SFIX has a Value grade of F.
URBN 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 URBN is likely the superior value option right now.
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Urban Outfitters, Inc. (URBN) : Free Stock Analysis Report
Stitch Fix, Inc. (SFIX) : Free Stock Analysis Report
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