Investors interested in Retail - Apparel and Shoes stocks are likely familiar with Zumiez (ZUMZ) and Boot Barn (BOOT). But which of these two companies is the best option for those looking for undervalued stocks? 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, both Zumiez and Boot Barn are holding a Zacks Rank of # 1 (Strong Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one piece of the puzzle for value investors.
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.
ZUMZ currently has a forward P/E ratio of 15.31, while BOOT has a forward P/E of 22.53. We also note that ZUMZ has a PEG ratio of 1.28. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. BOOT currently has a PEG ratio of 1.50.
Another notable valuation metric for ZUMZ is its P/B ratio of 2.10. 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, BOOT has a P/B of 3.89.
These are just a few of the metrics contributing to ZUMZ's Value grade of B and BOOT's Value grade of C.
Both ZUMZ and BOOT are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ZUMZ is the superior value option right now.
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Zumiez Inc. (ZUMZ) : Free Stock Analysis Report
Boot Barn Holdings, Inc. (BOOT) : Free Stock Analysis Report
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