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GAP or TPR: Which Is the Better Value Stock Right Now?
Investors looking for stocks in the Retail - Apparel and Shoes sector might want to consider either Gap (GAP - Free Report) or Tapestry (TPR - 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.
Gap has a Zacks Rank of #2 (Buy), while Tapestry has a Zacks Rank of #3 (Hold) right now. This means that GAP's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture 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.
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.
GAP currently has a forward P/E ratio of 12.17, while TPR has a forward P/E of 16.40. We also note that GAP has a PEG ratio of 1.10. 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. TPR currently has a PEG ratio of 2.15.
Another notable valuation metric for GAP is its P/B ratio of 2.96. 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, TPR has a P/B of 5.93.
These are just a few of the metrics contributing to GAP's Value grade of A and TPR's Value grade of C.
GAP sticks out from TPR in both our Zacks Rank and Style Scores models, so value investors will likely feel that GAP is the better option right now.