Markets

HBI or VFC: Which Is the Better Value Stock Right Now?

Investors with an interest in Textile - Apparel stocks have likely encountered both HanesBrands (HBI) and V.F. (VFC). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.

Currently, HanesBrands has a Zacks Rank of #1 (Strong Buy), while V.F. has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that HBI is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture 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.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

HBI currently has a forward P/E ratio of 10.74, while VFC has a forward P/E of 63.21. We also note that HBI has a PEG ratio of 3.25. 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. VFC currently has a PEG ratio of 5.39.

Another notable valuation metric for HBI is its P/B ratio of 5.05. 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, VFC has a P/B of 9.27.

These metrics, and several others, help HBI earn a Value grade of B, while VFC has been given a Value grade of D.

HBI 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 HBI is likely the superior value 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.

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