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ZUMZ vs. GOOS: Which Stock Should Value Investors Buy Now?

Zacks Equity Research

Investors interested in stocks from the Retail - Apparel and Shoes sector have probably already heard of Zumiez (ZUMZ) and Canada Goose (GOOS). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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.

Zumiez and Canada Goose are sporting Zacks Ranks of #2 (Buy) and #5 (Strong Sell), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ZUMZ is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle 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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Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

ZUMZ currently has a forward P/E ratio of 7.15, while GOOS has a forward P/E of 17.16. We also note that ZUMZ has a PEG ratio of 0.60. 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. GOOS currently has a PEG ratio of 0.83.

Another notable valuation metric for ZUMZ is its P/B ratio of 1.16. 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, GOOS has a P/B of 4.99.

These are just a few of the metrics contributing to ZUMZ's Value grade of B and GOOS's Value grade of D.

ZUMZ has seen stronger estimate revision activity and sports more attractive valuation metrics than GOOS, so it seems like value investors will conclude that ZUMZ is the superior option right now.


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Zumiez Inc. (ZUMZ) : Free Stock Analysis Report
 
Canada Goose Holdings Inc. (GOOS) : Free Stock Analysis Report
 
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Zacks Investment Research