Investors with an interest in Consumer Products – Discretionary stocks have likely encountered both Funko, Inc. (FNKO) and Luxottica (LUXTY). 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.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.
Right now, Funko, Inc. is sporting a Zacks Rank of #2 (Buy), while Luxottica has a Zacks Rank of #5 (Strong Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that FNKO 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 are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.
FNKO currently has a forward P/E ratio of 20.73, while LUXTY has a forward P/E of 26.98. We also note that FNKO has a PEG ratio of 1.02. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. LUXTY currently has a PEG ratio of 6.30.
Another notable valuation metric for FNKO is its P/B ratio of 2.33. 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, LUXTY has a P/B of 4.63.
Based on these metrics and many more, FNKO holds a Value grade of A, while LUXTY has a Value grade of D.
FNKO stands above LUXTY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that FNKO is the superior value option right now.
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