SKX vs. NKE: Assessing the Better Value Stock

When examining the Shoes and Retail Apparel sector, investors often take note of prominent companies like Skechers (SKX) and Nike (NKE). A critical question arises – which stock is the more attractive value investment at the moment? A thorough analysis is required to determine the answer.

Understanding Value through Zacks Rank and Style Scores

The Zacks Rank system aids investors in identifying stocks with a positive earnings estimate revision trend, while the Style Scores system is designed to spotlight firms with appealing attributes. Currently, Skechers boasts a Zacks Rank of #2 (Buy), suggesting an optimistic analyst outlook due to better earnings estimate revisions in comparison to Nike's Zacks Rank of #3 (Hold).

Valuation Metrics: A Closer Look

Value investors give weight to various valuation metrics to ascertain if a company is undervalued at its current market price. Among these are the classic P/E ratio, the P/S ratio, earnings yield, and cash flow per share, along with other fundamental indicators.

Presently, Skechers holds a forward P/E ratio of 15.31, whereas Nike's stands at 28.24. Skechers also has a PEG ratio of 0.56, which takes into account the firm's expected earnings growth and provides a nuanced view similar to the P/E ratio. Nike's PEG ratio sits at 1.87.

The P/B ratio, which measures the comparison between a stock’s market value and its book value, is yet another significant metric. Skechers has a P/B ratio of 2.19, in contrast to Nike's higher P/B ratio of 10.84.

These metrics contribute to Skechers receiving a Value grade of B, while Nike is awarded a Value grade of D.

Final Evaluation

Considering the stronger estimate revision activity and the more favorable valuation metrics, it appears that value investors may find Skechers to be the better value stock choice at the present time when compared to Nike.

Skechers, Nike, Investment