Investors looking for stocks in the Textile - Apparel sector might want to consider either G-III Apparel Group (GIII) or Kontoor Brands (KTB). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, G-III Apparel Group is sporting a Zacks Rank of #1 (Strong Buy), while Kontoor Brands has a Zacks Rank of #4 (Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that GIII 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 also try to analyze a wide range of traditional figures and metrics to help determine whether 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 8.59, while KTB has a forward P/E of 10.70. We also note that GIII has a PEG ratio of 0.75. 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. KTB currently has a PEG ratio of 2.38.
Another notable valuation metric for GIII is its P/B ratio of 1. 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, KTB has a P/B of 39.97.
These metrics, and several others, help GIII earn a Value grade of B, while KTB has been given a Value grade of D.
GIII sticks out from KTB 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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Zacks Investment Research