Investors interested in Retail - Apparel and Shoes stocks are likely familiar with Canada Goose (GOOS) and MINISO Group Holding Limited Unsponsored ADR (MNSO). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Canada Goose and MINISO Group Holding Limited Unsponsored ADR are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. Investors should feel comfortable knowing that GOOS likely has seen a stronger improvement to its earnings outlook than MNSO has recently. But this is just one piece of the puzzle 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.
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.
GOOS currently has a forward P/E ratio of 13.03, while MNSO has a forward P/E of 15.70. We also note that GOOS has a PEG ratio of 0.96. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. MNSO currently has a PEG ratio of 1.11.
Another notable valuation metric for GOOS is its P/B ratio of 3.94. 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, MNSO has a P/B of 4.46.
These metrics, and several others, help GOOS earn a Value grade of A, while MNSO has been given a Value grade of C.
GOOS is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that GOOS is likely the superior value option right now.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
