Investors interested in Retail - Apparel and Shoes stocks are likely familiar with Genesco (GCO) and Canada Goose (GOOS). But which of these two stocks presents investors with the better value opportunity right now? 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Genesco has a Zacks Rank of #2 (Buy), while Canada Goose has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that GCO is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.
GCO currently has a forward P/E ratio of 13.10, while GOOS has a forward P/E of 58.38. We also note that GCO has a PEG ratio of 1.75. 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. GOOS currently has a PEG ratio of 1.91.
Another notable valuation metric for GCO is its P/B ratio of 1.03. 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, GOOS has a P/B of 31.42.
These are just a few of the metrics contributing to GCO's Value grade of A and GOOS's Value grade of F.
GCO stands above GOOS thanks to its solid earnings outlook, and based on these valuation figures, we also feel that GCO is the superior value option right now.