Investors with an interest in Retail - Apparel and Shoes stocks have likely encountered both Urban Outfitters (URBN) and Deckers (DECK). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Urban Outfitters and Deckers are sporting Zacks Ranks of #1 (Strong Buy) and #4 (Sell), respectively, right now. 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 piece of the puzzle 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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
URBN currently has a forward P/E ratio of 14.25, while DECK has a forward P/E of 16.83. We also note that URBN has a PEG ratio of 1.19. 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. DECK currently has a PEG ratio of 6.19.
Another notable valuation metric for URBN is its P/B ratio of 2.69. 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, DECK has a P/B of 6.16.
These metrics, and several others, help URBN earn a Value grade of B, while DECK has been given a Value grade of C.
URBN stands above DECK thanks to its solid earnings outlook, and based on these valuation figures, we also feel that URBN is the superior value option right now.
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Urban Outfitters, Inc. (URBN): Free Stock Analysis Report Deckers Outdoor Corporation (DECK): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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