Investors looking for stocks in the Shoes and Retail Apparel sector might want to consider either Wolverine World Wide (WWW) or Nike (NKE). 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 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.
Currently, Wolverine World Wide has a Zacks Rank of #2 (Buy), while Nike has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that WWW likely has seen a stronger improvement to its earnings outlook than NKE has recently. However, value investors will care about much more than just this.
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.
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.
WWW currently has a forward P/E ratio of 14.21, while NKE has a forward P/E of 37.81. We also note that WWW has a PEG ratio of 1.42. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. NKE currently has a PEG ratio of 2.48.
Another notable valuation metric for WWW is its P/B ratio of 4.16. 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, NKE has a P/B of 19.46.
Based on these metrics and many more, WWW holds a Value grade of B, while NKE has a Value grade of D.
WWW stands above NKE thanks to its solid earnings outlook, and based on these valuation figures, we also feel that WWW is the superior value option right now.
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Wolverine World Wide, Inc. (WWW) : Free Stock Analysis Report
NIKE, Inc. (NKE) : Free Stock Analysis Report
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