Investors interested in stocks from the Leisure and Recreation Products sector have probably already heard of Callaway Golf (ELY) and Yeti (YETI). 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.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, both Callaway Golf and Yeti are sporting a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one factor that value investors are interested in.
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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
ELY currently has a forward P/E ratio of 18.44, while YETI has a forward P/E of 27.09. We also note that ELY has a PEG ratio of 0.74. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company’s expected earnings growth rate. YETI currently has a PEG ratio of 1.60.
Another notable valuation metric for ELY is its P/B ratio of 2.42. 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, YETI has a P/B of 39.11.
These are just a few of the metrics contributing to ELY’s Value grade of A and YETI’s Value grade of C.
Both ELY and YETI are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ELY is the superior value option right now.
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