HBI vs. VFC: Which Stock Should Value Investors Buy Now?
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 presents investors with the better value opportunity right now? 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, both HanesBrands and V.F. are sporting a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. 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.
HBI currently has a forward P/E ratio of 8.51, while VFC has a forward P/E of 23.89. We also note that HBI has a PEG ratio of 1.96. 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. VFC currently has a PEG ratio of 2.26.
Another notable valuation metric for HBI is its P/B ratio of 4.78. 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, VFC has a P/B of 7.70.
These are just a few of the metrics contributing to HBI's Value grade of A and VFC's Value grade of D.
Both HBI and VFC are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that HBI is 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.