YETI vs. POOL: Which Stock Is the Better Value Option?

Investors looking for stocks in the Leisure and Recreation Products sector might want to consider either Yeti (YETI) or Pool Corp. (POOL). But which of these two companies is the best option for those looking for undervalued stocks? 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.

Yeti and Pool Corp. are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. This means that YETI'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 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.

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.

YETI currently has a forward P/E ratio of 15.11, while POOL has a forward P/E of 28.01. We also note that YETI has a PEG ratio of 2.17. 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. POOL currently has a PEG ratio of 4.21.

Another notable valuation metric for YETI is its P/B ratio of 3.29. 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, POOL has a P/B of 8.81.

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

YETI stands above POOL thanks to its solid earnings outlook, and based on these valuation figures, we also feel that YETI is the superior value option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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