Investors looking for stocks in the Retail - Jewelry sector might want to consider either Signet (SIG) or 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.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Signet has a Zacks Rank of #2 (Buy), while Compagnie Financiere Richemont AG has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that SIG 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 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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
SIG currently has a forward P/E ratio of 8.77, while CFRUY has a forward P/E of 25.17. We also note that SIG has a PEG ratio of 0.72. 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. CFRUY currently has a PEG ratio of 2.86.
Another notable valuation metric for SIG is its P/B ratio of 1.85. 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 8.57.
These metrics, and several others, help SIG earn a Value grade of A, while CFRUY has been given a Value grade of D.
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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