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HELE vs. ELF: Which Stock Should Value Investors Buy Now?

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Investors looking for stocks in the Cosmetics sector might want to consider either Helen of Troy (HELE - Free Report) or e.l.f. Beauty (ELF - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. 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.

Helen of Troy and e.l.f. Beauty are sporting Zacks Ranks of #2 (Buy) and #5 (Strong Sell), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that HELE has an improving earnings outlook. However, value investors will care about much more than just this.

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.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

HELE currently has a forward P/E ratio of 6.68, while ELF has a forward P/E of 19.10. We also note that HELE has a PEG ratio of 1.34. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ELF currently has a PEG ratio of 4.18.

Another notable valuation metric for HELE is its P/B ratio of 0.73. 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, ELF has a P/B of 4.68.

These are just a few of the metrics contributing to HELE's Value grade of A and ELF's Value grade of F.

HELE 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 HELE is likely the superior value option right now.


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