Investors with an interest in Retail - Apparel and Shoes stocks have likely encountered both XCel Brands (XELB) and Tapestry (TPR). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.
Both XCel Brands and Tapestry have 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 try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
XELB currently has a forward P/E ratio of 7.33, while TPR has a forward P/E of 13.67. We also note that XELB has a PEG ratio of 0.73. 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. TPR currently has a PEG ratio of 1.22.
Another notable valuation metric for XELB is its P/B ratio of 0.40. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, TPR has a P/B of 3.33.
These are just a few of the metrics contributing to XELB's Value grade of A and TPR's Value grade of C.
Both XELB and TPR are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that XELB is the superior value option right now.
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Xcel Brands, Inc (XELB) : Free Stock Analysis Report
Tapestry, Inc. (TPR) : Free Stock Analysis Report
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