While everyone has their own strategy for identifying high-quality bargain prospects, ours involves combining a high Zacks Rank with an outstanding score in the bargain category of our Style Scores methodology. Earnings estimates and adjustments to those expectations are the focal points of the tried-and-true Zacks Rank, while our Style Scores seek out stocks that exhibit particular characteristics.
Currently, Crocs is ranked #2 (Buy) on Zacks while Lululemon is ranked #3 (Hold) on Zacks. Investors should be at ease with the rising analyst outlook for CROX because of its more impressive earnings estimate revision activity. However, for value investors, this is just partial information.
To identify companies that they think are underpriced at the moment, value investors use a number of conventional, time-tested measures.
Using a number of tried-and-true fundamentals utilized by value investors for decades—such as the price-to-earnings ratio (P/E), price-to-sales ratio (P/S), earnings yield (Yield), and cash flow per share (CFPS)—our Value category identifies undervalued firms.
At present, the forward price-to-earnings ratio for CROX is 10.23 and for LULU it is 31.88. There is a PEG ratio of 1.58 for CROX, which is worth mentioning.
This well-liked metric is comparable to the popular P/E ratio; however, the PEG ratio takes into account a company's projected EPS growth rate in addition to that. At present, LULU's PEG ratio stands at 1.59.
The 5.28 price-to-book ratio is another important valuation statistic for CROX. To compare the market value of a stock to its book value—calculated as total assets minus total liabilities—investors use the price-to-book ratio (P/B). In contrast, LULU's P/B ratio is 16.39. A number of factors, including these, went into assigning CROX an A+ value grade and LULU a F value grade.
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