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AEO vs. PPRUY: Which Stock Should Value Investors Buy Now?

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Investors looking for stocks in the Retail - Apparel and Shoes sector might want to consider either American Eagle Outfitters (AEO - Free Report) or Kering SA (PPRUY - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

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 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.

American Eagle Outfitters has a Zacks Rank of #2 (Buy), while Kering SA has a Zacks Rank of #5 (Strong Sell) right now. Investors should feel comfortable knowing that AEO likely has seen a stronger improvement to its earnings outlook than PPRUY has recently. However, value investors will care about much more than just this.

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.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

AEO currently has a forward P/E ratio of 14.84, while PPRUY has a forward P/E of 16.86. We also note that AEO has a PEG ratio of 1.54. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. PPRUY currently has a PEG ratio of 3.69.

Another notable valuation metric for AEO is its P/B ratio of 1.90. 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, PPRUY has a P/B of 4.55.

These metrics, and several others, help AEO earn a Value grade of A, while PPRUY has been given a Value grade of F.

AEO 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 AEO is likely the superior value option right now.


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American Eagle Outfitters, Inc. (AEO) - free report >>

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