HBI vs. LULU: Which Stock Should Value Investors Buy Now?
HBI vs. LULU: Which Stock Is the Better Value Option?
Investors with an interest in Textile - Apparel stocks have likely encountered both HanesBrands (HBI) and Lululemon (LULU). 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.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Both HanesBrands and Lululemon have a Zacks Rank of # 2 (Buy) right now. 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. But this is just one piece of the puzzle 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 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.
HBI currently has a forward P/E ratio of 11.39, while LULU has a forward P/E of 57.17. We also note that HBI has a PEG ratio of 1.35. 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. LULU currently has a PEG ratio of 3.12.
Another notable valuation metric for HBI is its P/B ratio of 12.03. 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, LULU has a P/B of 20.01.
These are just a few of the metrics contributing to HBI's Value grade of B and LULU's Value grade of F.
Both HBI and LULU are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that HBI is the superior value option right now.
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Hanesbrands Inc. (HBI): Free Stock Analysis Report
lululemon athletica inc. (LULU): Free Stock Analysis Report
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