Investors interested in Retail - Apparel and Shoes stocks are likely familiar with Victoria's Secret (VSCO) and Tapestry (TPR). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.
Right now, Victoria's Secret is sporting a Zacks Rank of #1 (Strong Buy), while Tapestry has a Zacks Rank of #2 (Buy). This means that VSCO'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.
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.
VSCO currently has a forward P/E ratio of 14.87, while TPR has a forward P/E of 23.66. We also note that VSCO has a PEG ratio of 1.56. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. TPR currently has a PEG ratio of 1.83.
Another notable valuation metric for VSCO is its P/B ratio of 4.55. 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, TPR has a P/B of 56.06.
These are just a few of the metrics contributing to VSCO's Value grade of A and TPR's Value grade of D.
VSCO has seen stronger estimate revision activity and sports more attractive valuation metrics than TPR, so it seems like value investors will conclude that VSCO is the superior option right now.
Zacks Names #1 Semiconductor Stock
This under-the-radar company specializes in semiconductor products that titans like NVIDIA don't build. It's uniquely positioned to take advantage of the next growth stage of this market. And it's just beginning to enter the spotlight, which is exactly where you want to be.
With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $971 billion by 2028.
See This Stock Now for Free >>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
Victoria's Secret & Co. (VSCO): Free Stock Analysis Report
Tapestry, Inc. (TPR): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).