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Investors looking for stocks in the Textile - Apparel sector might want to consider either Oxford Industries (OXM) or Lululemon (LULU). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.
Oxford Industries and Lululemon are both sporting 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. 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.
OXM currently has a forward P/E ratio of 16.34, while LULU has a forward P/E of 37.68. We also note that OXM has a PEG ratio of 1.63. 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. LULU currently has a PEG ratio of 2.05.
Another notable valuation metric for OXM is its P/B ratio of 2.57. 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, LULU has a P/B of 16.72.
These metrics, and several others, help OXM earn a Value grade of B, while LULU has been given a Value grade of D.
Both OXM and LULU are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that OXM is the superior value option right now.
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