TPR or GPS: Which Is the Better Value Stock Right Now?
TPR vs. GPS: Which Stock Is the Better Value Option?
Investors interested in stocks from the Retail - Apparel and Shoes sector have probably already heard of Tapestry (TPR) and Gap (GPS). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, both Tapestry and Gap are sporting a Zacks Rank of # 2 (Buy). 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. However, value investors will care about much more than just this.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.
TPR currently has a forward P/E ratio of 12.67, while GPS has a forward P/E of 15.62. We also note that TPR has a PEG ratio of 1.27. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. GPS currently has a PEG ratio of 1.30.
Another notable valuation metric for TPR is its P/B ratio of 3.62. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, GPS has a P/B of 3.81.
Based on these metrics and many more, TPR holds a Value grade of B, while GPS has a Value grade of D.
Both TPR and GPS are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that TPR is the superior value option right now.
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Tapestry, Inc. (TPR): Free Stock Analysis Report
The Gap, Inc. (GPS): Free Stock Analysis Report
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