Investors with an interest in Retail - Apparel and Shoes stocks have likely encountered both Urban Outfitters (URBN) and Boot Barn (BOOT). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Urban Outfitters has a Zacks Rank of #2 (Buy), while Boot Barn has a Zacks Rank of #4 (Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that URBN has an improving earnings outlook. But this is just one factor that value investors are interested in.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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 14.85, while BOOT has a forward P/E of 25.22. We also note that URBN has a PEG ratio of 1.24. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. BOOT currently has a PEG ratio of 1.94.
Another notable valuation metric for URBN is its P/B ratio of 2.75. 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, BOOT has a P/B of 4.25.
Based on these metrics and many more, URBN holds a Value grade of B, while BOOT has a Value grade of D.
URBN 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 URBN is likely the superior value option right now.
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Urban Outfitters, Inc. (URBN): Free Stock Analysis Report Boot Barn Holdings, Inc. (BOOT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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