VFC vs. CTAS: Which Stock Should Value Investors Buy Now?

Investors interested in Textile - Apparel stocks are likely familiar with V.F. (VFC) and Cintas (CTAS). 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.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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.

Currently, V.F. has a Zacks Rank of #1 (Strong Buy), while Cintas has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that VFC likely has seen a stronger improvement to its earnings outlook than CTAS has recently. However, value investors will care about much more than just this.

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.

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.

VFC currently has a forward P/E ratio of 15.40, while CTAS has a forward P/E of 33.83. We also note that VFC has a PEG ratio of 0.88. 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. CTAS currently has a PEG ratio of 2.91.

Another notable valuation metric for VFC is its P/B ratio of 3.86. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, CTAS has a P/B of 13.81.

Based on these metrics and many more, VFC holds a Value grade of B, while CTAS has a Value grade of F.

VFC 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 VFC is likely the superior value option right now.

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

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