CPRI vs. TPR: Which Stock Is the Better Value Option?
Investors looking for stocks in the Retail - Apparel and Shoes sector might want to consider either Capri Holdings (CPRI) or Tapestry (TPR). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Capri Holdings has a Zacks Rank of #2 (Buy), while Tapestry has a Zacks Rank of #5 (Strong Sell) right now. This means that CPRI's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
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.
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.
CPRI currently has a forward P/E ratio of 5.90, while TPR has a forward P/E of 9.87. We also note that CPRI has a PEG ratio of 1.03. 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. TPR currently has a PEG ratio of 1.06.
Another notable valuation metric for CPRI is its P/B ratio of 1.87. 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, TPR has a P/B of 2.08.
These metrics, and several others, help CPRI earn a Value grade of A, while TPR has been given a Value grade of C.
CPRI has seen stronger estimate revision activity and sports more attractive valuation metrics than TPR, so it seems like value investors will conclude that CPRI is the superior option right now.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.