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AEO vs. DECK: Which Stock Is the Better Value Option?

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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 Deckers (DECK - 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

American Eagle Outfitters and Deckers are both sporting a Zacks Rank of # 2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one factor that value investors are interested in.

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.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

AEO currently has a forward P/E ratio of 12.01, while DECK has a forward P/E of 30.04. We also note that AEO has a PEG ratio of 1. 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. DECK currently has a PEG ratio of 2.78.

Another notable valuation metric for AEO is its P/B ratio of 2.40. 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, DECK has a P/B of 11.62.

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

Both AEO and DECK are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that AEO is the superior value option right now.


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

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