Investors interested in Textile - Apparel stocks are likely familiar with G-III Apparel Group (GIII) and Columbia Sportswear (COLM). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. 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.
G-III Apparel Group and Columbia Sportswear are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that GIII has an improving earnings outlook. But this is just one factor that value investors are interested in.
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.
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.
GIII currently has a forward P/E ratio of 5.88, while COLM has a forward P/E of 16.95. We also note that GIII has a PEG ratio of 0.39. 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. COLM currently has a PEG ratio of 2.
Another notable valuation metric for GIII is its P/B ratio of 0.65. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, COLM has a P/B of 3.03.
These are just a few of the metrics contributing to GIII's Value grade of A and COLM's Value grade of C.
GIII sticks out from COLM in both our Zacks Rank and Style Scores models, so value investors will likely feel that GIII is the better option right now.
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