Investors with an interest in Consumer Products - Staples stocks have likely encountered both National Vision (EYE) and Hermes International SA - Unsponsored ADR (HESAY). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
National Vision has a Zacks Rank of #2 (Buy), while Hermes International SA - Unsponsored ADR has a Zacks Rank of #4 (Sell) right now. This means that EYE's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
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.
EYE currently has a forward P/E ratio of 30.39, while HESAY has a forward P/E of 45.24. We also note that EYE has a PEG ratio of 1.10. 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. HESAY currently has a PEG ratio of 3.66.
Another notable valuation metric for EYE is its P/B ratio of 2.53. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, HESAY has a P/B of 13.96.
These metrics, and several others, help EYE earn a Value grade of B, while HESAY has been given a Value grade of F.
EYE has seen stronger estimate revision activity and sports more attractive valuation metrics than HESAY, so it seems like value investors will conclude that EYE is the superior option right now.
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National Vision Holdings, Inc. (EYE): Free Stock Analysis Report Hermes International SA - Unsponsored ADR (HESAY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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