Investors looking for stocks in the Textile - Apparel sector might want to consider either Superior Group (SGC) or Revolve Group (RVLV). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, both Superior Group and Revolve Group are sporting a Zacks Rank of #2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. 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.
SGC currently has a forward P/E ratio of 21.08, while RVLV has a forward P/E of 38.70. We also note that SGC has a PEG ratio of 2.11. 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. RVLV currently has a PEG ratio of 2.17.
Another notable valuation metric for SGC is its P/B ratio of 0.76. 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, RVLV has a P/B of 3.04.
These are just a few of the metrics contributing to SGC's Value grade of A and RVLV's Value grade of C.
Both SGC and RVLV are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that SGC is the superior value option right now.
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Superior Group of Companies, Inc. (SGC): Free Stock Analysis Report Revolve Group, Inc. (RVLV): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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