Investors looking for stocks in the Retail - Jewelry sector might want to consider either Signet (SIG) or Compagnie Financiere Richemont AG (CFRUY). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Signet has a Zacks Rank of #2 (Buy), while Compagnie Financiere Richemont AG has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that SIG likely has seen a stronger improvement to its earnings outlook than CFRUY has recently. But this is just one factor that value investors are interested in.
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 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.
SIG currently has a forward P/E ratio of 9.66, while CFRUY has a forward P/E of 30.39. We also note that SIG has a PEG ratio of 1.00. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. CFRUY currently has a PEG ratio of 3.75.
Another notable valuation metric for SIG is its P/B ratio of 2.12. 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, CFRUY has a P/B of 9.8.
These metrics, and several others, help SIG earn a Value grade of A, while CFRUY has been given a Value grade of C.
SIG is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that SIG is likely the superior value option right now.
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Signet Jewelers Limited (SIG): Free Stock Analysis Report Compagnie Financiere Richemont AG (CFRUY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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