ASO vs. AS: Which Stock Is the Better Value Option?

Investors interested in stocks from the Leisure and Recreation Products sector have probably already heard of Academy Sports and Outdoors, Inc. (ASO) and Amer Sports, Inc. (AS). 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.

Both Academy Sports and Outdoors, Inc. and Amer Sports, Inc. have a Zacks Rank of #2 (Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is only part of the picture for value investors.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.

ASO currently has a forward P/E ratio of 8.94, while AS has a forward P/E of 23.28. We also note that ASO has a PEG ratio of 0.78. 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. AS currently has a PEG ratio of 0.96.

Another notable valuation metric for ASO is its P/B ratio of 1.7. 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, AS has a P/B of 2.44.

Based on these metrics and many more, ASO holds a Value grade of A, while AS has a Value grade of C.

Both ASO and AS are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ASO is the superior value option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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