IInvestors with an interest in retail and apparel and footwear stocks have likely come across both Foot Locker (FL) and Nordstrom (JWN). But which of these two stocks is more attractive to value investors? We have to take a closer look to find out.
Everyone has their own method of finding opportunities, but our model involves combining an impressive grade in the Value category of our style scores system with a strong Zacks rank. The Zacks rank favors stocks with strong revision trends in earnings estimates, and our style scores highlight companies with certain characteristics.
Foot Locker and Nordstrom currently lead Zacks # 1 (Strong Buy) and # 3 (Hold) respectively. This means that the revision activity of FL’s earnings estimates has been more impressive, so investors should be comfortable with the improving analyst outlook. But that’s only part of the picture for value investors.
Value investors analyze a variety of traditional, proven metrics to find companies that they believe are undervalued at their current share price levels.
Our Value category ranks stocks based on a number of key metrics, including time-tested P / E, P / E, earnings return, and cash flow per share, as well as a variety of other fundamentals that value investors often use.
FL currently has a price to earnings ratio of 11.29 while JWN has a price to earnings ratio of 28.62. We also find that FL has a PEG ratio of 2.83. This number is similar to the commonly used P / E ratio, with the PEG ratio also taking into account a company’s expected earnings growth rate. JWN currently has a PEG ratio of 4.77.
Another notable valuation metric for FL is its P / E ratio of 2.15. Investors use the P / E ratio to look at the market value of a stock versus its book value, which is defined as total assets minus total liabilities. By comparison, JWN has a P / B of 32.06.
Based on these and many other metrics, FL has a value grade of B while JWN has a value grade of D.
FL has seen more valuation revision activity and offers more attractive valuation metrics than JWN, so value investors will conclude that FL is the superior option right now.
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Foot Locker, Inc. (FL): Free Stock Research Report
Nordstrom, Inc. (JWN): Free Stock Research Report
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.