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CRI vs. NKE: Which Stock Should Value Investors Buy Now?

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Investors with an interest in Shoes and Retail Apparel stocks have likely encountered both Carter's (CRI - Free Report) and Nike (NKE - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, Carter's has a Zacks Rank of #2 (Buy), while Nike has a Zacks Rank of #3 (Hold). This means that CRI's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.

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.

CRI currently has a forward P/E ratio of 10.25, while NKE has a forward P/E of 36.80. We also note that CRI has a PEG ratio of 0.98. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. NKE currently has a PEG ratio of 2.63.

Another notable valuation metric for CRI is its P/B ratio of 4.07. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, NKE has a P/B of 14.56.

These metrics, and several others, help CRI earn a Value grade of A, while NKE has been given a Value grade of D.

CRI is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that CRI is likely the superior value option right now.


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