PVH vs. GIL: Which Stock Is the Better Value Option?

Investors with an interest in Textile – Apparel stocks have likely encountered both PVH (PVH) and Gildan Activewear (GIL). But which of these two stocks is more attractive to value investors? We’ll need to take a closer look to find out.

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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

PVH has a Zacks Rank of #2 (Buy), while Gildan Activewear has a Zacks Rank of #3 (Hold) right now. This means that PVH’s earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.

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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

PVH currently has a forward P/E ratio of 8.66, while GIL has a forward P/E of 19.97. We also note that PVH has a PEG ratio of 0.72. 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. GIL currently has a PEG ratio of 1.43.

Another notable valuation metric for PVH is its P/B ratio of 1.16. 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, GIL has a P/B of 4.24.

Based on these metrics and many more, PVH holds a Value grade of B, while GIL has a Value grade of D.

PVH has seen stronger estimate revision activity and sports more attractive valuation metrics than GIL, so it seems like value investors will conclude that PVH is the superior option right now.

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