HBI vs. VFC: Which Stock Is the Better Value Option?
Investors interested in stocks from the Textile - Apparel sector have probably already heard of HanesBrands (HBI) and V.F. (VFC). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 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.
Currently, HanesBrands has a Zacks Rank of #1 (Strong Buy), while V.F. has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that HBI likely has seen a stronger improvement to its earnings outlook than VFC 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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
HBI currently has a forward P/E ratio of 9.72, while VFC has a forward P/E of 55.38. We also note that HBI has a PEG ratio of 2.95. 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 4.72.
Another notable valuation metric for HBI is its P/B ratio of 4.60. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, VFC has a P/B of 7.96.
These are just a few of the metrics contributing to HBI's Value grade of A and VFC's Value grade of D.
HBI has seen stronger estimate revision activity and sports more attractive valuation metrics than VFC, so it seems like value investors will conclude that HBI is the superior option right now.
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