Investors looking for stocks in the Cosmetics sector might want to consider either Helen of Troy (HELE) or e.l.f. Beauty (ELF). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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.
Both Helen of Troy and e.l.f. Beauty have a Zacks Rank of # 2 (Buy) right now. 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 analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.
HELE currently has a forward P/E ratio of 11.71, while ELF has a forward P/E of 60.55. We also note that HELE has a PEG ratio of 1.46. 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. ELF currently has a PEG ratio of 3.02.
Another notable valuation metric for HELE is its P/B ratio of 1.65. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, ELF has a P/B of 14.27.
Based on these metrics and many more, HELE holds a Value grade of A, while ELF has a Value grade of F.
Both HELE and ELF are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that HELE is the superior value option right now.
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Free: See Our Top Stock and 4 Runners Up >>Helen of Troy Limited (HELE) : Free Stock Analysis Report
e.l.f. Beauty (ELF) : Free Stock Analysis Report
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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.
