Yahoo Finance GIL or LULU: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Textile - Apparel sector have probably already heard of Gildan Activewear (GIL) and Lululemon (LULU). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Gildan Activewear has a Zacks Rank of #2 (Buy), while Lululemon has a Zacks Rank of #3 (Hold). This means that GIL'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 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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
GIL currently has a forward P/E ratio of 15.96, while LULU has a forward P/E of 19.52. We also note that GIL has a PEG ratio of 1.77. 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. LULU currently has a PEG ratio of 1.99.
Another notable valuation metric for GIL is its P/B ratio of 4.18. 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, LULU has a P/B of 8.33.
These metrics, and several others, help GIL earn a Value grade of B, while LULU has been given a Value grade of C.
GIL stands above LULU thanks to its solid earnings outlook, and based on these valuation figures, we also feel that GIL is the superior value option right now.
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Gildan Activewear, Inc. (GIL) : Free Stock Analysis Report
lululemon athletica inc. (LULU) : Free Stock Analysis Report
