BOOT vs. IDEXY: Which Stock Is the Better Value Option?

Investors interested in Retail - Apparel and Shoes stocks are likely familiar with Boot Barn (BOOT) and Industria de Diseno Textil SA (IDEXY). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, Boot Barn has a Zacks Rank of #2 (Buy), while Industria de Diseno Textil SA has a Zacks Rank of #4 (Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that BOOT is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.

BOOT currently has a forward P/E ratio of 17.78, while IDEXY has a forward P/E of 26.74. We also note that BOOT has a PEG ratio of 1.05. 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. IDEXY currently has a PEG ratio of 2.74.

Another notable valuation metric for BOOT is its P/B ratio of 3.57. 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, IDEXY has a P/B of 9.43.

These metrics, and several others, help BOOT earn a Value grade of B, while IDEXY has been given a Value grade of D.

BOOT 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 BOOT is likely the superior value option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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