Investors with an interest in Textile - Apparel stocks have likely encountered both PVH (PVH) and LVMH-Moet Hennessy Louis Vuitton SA (LVMUY). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
PVH has a Zacks Rank of #1 (Strong Buy), while LVMH-Moet Hennessy Louis Vuitton SA has a Zacks Rank of #3 (Hold) right now. This means that PVH's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture 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.
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.
PVH currently has a forward P/E ratio of 7.40, while LVMUY has a forward P/E of 20.77. We also note that PVH has a PEG ratio of 0.98. 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. LVMUY currently has a PEG ratio of 2.35.
Another notable valuation metric for PVH is its P/B ratio of 0.85. 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, LVMUY has a P/B of 3.46.
These are just a few of the metrics contributing to PVH's Value grade of A and LVMUY's Value grade of C.
PVH has seen stronger estimate revision activity and sports more attractive valuation metrics than LVMUY, so it seems like value investors will conclude that PVH is the superior option right now.
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."
Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.9% per year. So be sure to give these hand picked 7 your immediate attention.
See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
PVH Corp. (PVH): Free Stock Analysis Report
LVMH-Moet Hennessy Louis Vuitton SA (LVMUY): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).