Investors with an interest in Shoes and Retail Apparel stocks have likely encountered both Wolverine World Wide (WWW) and Steven Madden (SHOO). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Wolverine World Wide and Steven Madden are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that WWW's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
WWW currently has a forward P/E ratio of 18.05, while SHOO has a forward P/E of 21.81. We also note that WWW has a PEG ratio of 1.80. 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. SHOO currently has a PEG ratio of 2.04.
Another notable valuation metric for WWW is its P/B ratio of 3.61. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, SHOO has a P/B of 4.12.
Based on these metrics and many more, WWW holds a Value grade of B, while SHOO has a Value grade of C.
WWW has seen stronger estimate revision activity and sports more attractive valuation metrics than SHOO, so it seems like value investors will conclude that WWW is the superior option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free reportWolverine World Wide, Inc. (WWW): Free Stock Analysis ReportSteven Madden, Ltd. (SHOO): Free Stock Analysis ReportTo read this article on Zacks.com click here.