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DECK vs. NKE: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
·2 min read

Investors looking for stocks in the Shoes and Retail Apparel sector might want to consider either Deckers (DECK) or Nike (NKE). 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.

Deckers has a Zacks Rank of #2 (Buy), while Nike has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that DECK has an improving earnings outlook. But this is only part of the picture for value investors.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

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The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

DECK currently has a forward P/E ratio of 14.65, while NKE has a forward P/E of 31.79. We also note that DECK has a PEG ratio of 0.85. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. NKE currently has a PEG ratio of 2.46.

Another notable valuation metric for DECK is its P/B ratio of 3.47. 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, NKE has a P/B of 14.70.

These metrics, and several others, help DECK earn a Value grade of B, while NKE has been given a Value grade of D.

DECK stands above NKE thanks to its solid earnings outlook, and based on these valuation figures, we also feel that DECK is the superior value option right now.


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Deckers Outdoor Corporation (DECK) : Free Stock Analysis Report
 
NIKE, Inc. (NKE) : Free Stock Analysis Report
 
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Zacks Investment Research