Investors looking for stocks in the Retail - Apparel and Shoes sector might want to consider either Urban Outfitters (URBN) or Industria de Diseno Textil SA (IDEXY). 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.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Urban Outfitters has a Zacks Rank of #1 (Strong Buy), while Industria de Diseno Textil SA has 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 URBN has an improving earnings outlook. However, value investors will care about much more than just this.
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.
URBN currently has a forward P/E ratio of 12.98, while IDEXY has a forward P/E of 16.27. We also note that URBN has a PEG ratio of 1.07. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. IDEXY currently has a PEG ratio of 2.38.
Another notable valuation metric for URBN is its P/B ratio of 2.36. 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, IDEXY has a P/B of 9.08.
These metrics, and several others, help URBN earn a Value grade of A, while IDEXY has been given a Value grade of C.
URBN stands above IDEXY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that URBN is the superior value option right now.
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Urban Outfitters, Inc. (URBN): Free Stock Analysis Report Industria de Diseno Textil SA (IDEXY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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