Investors interested in Retail - Apparel and Shoes stocks are likely familiar with Urban Outfitters (URBN) and Industria de Diseno Textil SA (IDEXY). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
Both Urban Outfitters and Industria de Diseno Textil SA have 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 only part of the picture for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
URBN currently has a forward P/E ratio of 15.50, while IDEXY has a forward P/E of 15.93. We also note that URBN has a PEG ratio of 1.23. 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. IDEXY currently has a PEG ratio of 2.12.
Another notable valuation metric for URBN is its P/B ratio of 2.71. 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, IDEXY has a P/B of 9.37.
These are just a few of the metrics contributing to URBN's Value grade of B and IDEXY's Value grade of D.
Both URBN and IDEXY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we 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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