GOOS or DECK: Which Is the Better Value Stock Right Now?

Investors interested in Retail - Apparel and Shoes stocks are likely familiar with Canada Goose (GOOS) and Deckers (DECK). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Canada Goose has a Zacks Rank of #2 (Buy), while Deckers has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that GOOS is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle 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.

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.

GOOS currently has a forward P/E ratio of 9.72, while DECK has a forward P/E of 17.16. We also note that GOOS has a PEG ratio of 0.65. 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. DECK currently has a PEG ratio of 1.13.

Another notable valuation metric for GOOS is its P/B ratio of 2.22. 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, DECK has a P/B of 6.39.

These metrics, and several others, help GOOS earn a Value grade of A, while DECK has been given a Value grade of C.

GOOS has seen stronger estimate revision activity and sports more attractive valuation metrics than DECK, so it seems like value investors will conclude that GOOS is the superior option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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