Investors interested in stocks from the Retail - Apparel and Shoes sector have probably already heard of J.Jill (JILL) and Canada Goose (GOOS). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, J.Jill has a Zacks Rank of #2 (Buy), while Canada Goose has a Zacks Rank of #5 (Strong Sell). This means that JILL's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture 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.
JILL currently has a forward P/E ratio of 11.35, while GOOS has a forward P/E of 65.75. We also note that JILL has a PEG ratio of 1.05. 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. GOOS currently has a PEG ratio of 2.51.
Another notable valuation metric for JILL is its P/B ratio of 2.13. 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, GOOS has a P/B of 25.68.
These metrics, and several others, help JILL earn a Value grade of A, while GOOS has been given a Value grade of F.
JILL sticks out from GOOS in both our Zacks Rank and Style Scores models, so value investors will likely feel that JILL is the better option right now.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.