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.
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 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.
Signet and Compagnie Financiere Richemont AG are both sporting a Zacks Rank of #2 (Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is just one factor that value investors are interested in.
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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
SIG currently has a forward P/E ratio of 10.06, while CFRUY has a forward P/E of 29.63. We also note that SIG has a PEG ratio of 1.13. 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. CFRUY currently has a PEG ratio of 3.65.
Another notable valuation metric for SIG is its P/B ratio of 2.19. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, CFRUY has a P/B of 9.79.
These are just a few of the metrics contributing to SIG's Value grade of B and CFRUY's Value grade of C.
Both SIG and CFRUY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that SIG is 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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