Advertisement
Canada markets open in 3 hours 13 minutes

  • S&P/TSX

    22,375.83
    +116.63 (+0.52%)
     

  • S&P 500

    5,214.08
    +26.41 (+0.51%)
     

  • DOW

    39,387.76
    +331.36 (+0.85%)
     

  • CAD/USD

    0.7306
    -0.0005 (-0.07%)
     

  • CRUDE OIL

    79.81
    +0.55 (+0.69%)
     

  • Bitcoin CAD

    86,134.83
    +2,433.70 (+2.91%)
     

  • CMC Crypto 200

    1,305.89
    -52.12 (-3.84%)
     

  • GOLD FUTURES

    2,378.90
    +38.60 (+1.65%)
     

  • RUSSELL 2000

    2,073.63
    +18.49 (+0.90%)
     

  • 10-Yr Bond

    4.4490
    -0.0430 (-0.96%)
     

  • NASDAQ futures

    18,294.50
    +80.00 (+0.44%)
     

  • VOLATILITY

    12.81
    +0.12 (+0.95%)
     

  • FTSE

    8,451.45
    +70.10 (+0.84%)
     

  • NIKKEI 225

    38,229.11
    +155.13 (+0.41%)
     

  • CAD/EUR

    0.6775
    -0.0003 (-0.04%)
     

HBI or LULU: Which Is the Better Value Stock Right Now?

Zacks Equity Research
·2 min read

Investors interested in stocks from the Textile - Apparel sector have probably already heard of HanesBrands (HBI) and Lululemon (LULU). But which of these two stocks presents investors with the better value opportunity right now? 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, both HanesBrands and Lululemon are sporting a Zacks Rank of # 2 (Buy). 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. 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.

ADVERTISEMENT

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.

HBI currently has a forward P/E ratio of 9.86, while LULU has a forward P/E of 56.24. We also note that HBI has a PEG ratio of 1.17. 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. LULU currently has a PEG ratio of 2.81.

Another notable valuation metric for HBI is its P/B ratio of 10.46. 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, LULU has a P/B of 20.50.

These metrics, and several others, help HBI earn a Value grade of B, while LULU has been given a Value grade of F.

Both HBI and LULU are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that HBI is the superior value option right now.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Hanesbrands Inc. (HBI) : Free Stock Analysis Report
 
lululemon athletica inc. (LULU) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research