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

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Investors interested in Textile - Apparel stocks are likely familiar with Crocs (CROX - Free Report) and Lululemon (LULU - Free Report) . 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, Crocs is sporting a Zacks Rank of #1 (Strong Buy), while Lululemon has a Zacks Rank of #2 (Buy). Investors should feel comfortable knowing that CROX likely has seen a stronger improvement to its earnings outlook than LULU has recently. However, value investors will care about much more than just this.

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.

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.

CROX currently has a forward P/E ratio of 7.14, while LULU has a forward P/E of 33.41. We also note that CROX has a PEG ratio of 0.48. 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. LULU currently has a PEG ratio of 1.67.

Another notable valuation metric for CROX is its P/B ratio of 8.98. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, LULU has a P/B of 14.74.

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

CROX stands above LULU thanks to its solid earnings outlook, and based on these valuation figures, we also feel that CROX is the superior value option right now.


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lululemon athletica inc. (LULU) - free report >>

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