Investors interested in stocks from the Retail - Jewelry sector have probably already heard of Signet (SIG) and Compagnie Financiere Richemont AG (CFRUY). 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.
Signet has a Zacks Rank of #2 (Buy), while Compagnie Financiere Richemont AG has a Zacks Rank of #3 (Hold) right now. This means that SIG's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst 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 8.38, while CFRUY has a forward P/E of 25.08. We also note that SIG has a PEG ratio of 0.57. 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. CFRUY currently has a PEG ratio of 2.81.
Another notable valuation metric for SIG is its P/B ratio of 1.80. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, CFRUY has a P/B of 9.20.
Based on these metrics and many more, SIG holds a Value grade of A, while CFRUY has a Value grade of F.
SIG 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 SIG is likely 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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