Investors with an interest in Leisure and Recreation Products stocks have likely encountered both Yeti (YETI) and Pool Corp. (POOL). But which of these two stocks presents investors with the better value opportunity right now? 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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Right now, Yeti is sporting a Zacks Rank of #2 (Buy), while Pool Corp. has a Zacks Rank of #3 (Hold). This means that YETI's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
YETI currently has a forward P/E ratio of 14.76, while POOL has a forward P/E of 18.02. We also note that YETI has a PEG ratio of 0.99. 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. POOL currently has a PEG ratio of 3.03.
Another notable valuation metric for YETI is its P/B ratio of 5.47. 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, POOL has a P/B of 5.84.
Based on these metrics and many more, YETI holds a Value grade of B, while POOL has a Value grade of C.
YETI has seen stronger estimate revision activity and sports more attractive valuation metrics than POOL, so it seems like value investors will conclude that YETI is the superior option right now.
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YETI Holdings, Inc. (YETI): Free Stock Analysis Report
Pool Corporation (POOL): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).