BOOT vs. TPR: Which Stock Is the Better Value Option?

Investors interested in stocks from the Retail - Apparel and Shoes sector have probably already heard of Boot Barn (BOOT) and Tapestry (TPR). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, both Boot Barn and Tapestry are holding a Zacks Rank of #2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is only part of the picture for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.

BOOT currently has a forward P/E ratio of 18.02, while TPR has a forward P/E of 18.23. We also note that BOOT has a PEG ratio of 1.08. 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. TPR currently has a PEG ratio of 1.29.

Another notable valuation metric for BOOT is its P/B ratio of 3.56. 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 41.53.

These metrics, and several others, help BOOT earn a Value grade of B, while TPR has been given a Value grade of C.

Both BOOT and TPR are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that BOOT 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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