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CPRI vs. FIGS: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
·2-min read

Investors with an interest in Retail - Apparel and Shoes stocks have likely encountered both Capri Holdings (CPRI) and Figs (FIGS). 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.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, Capri Holdings is sporting a Zacks Rank of #2 (Buy), while Figs has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that CPRI is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

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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.

CPRI currently has a forward P/E ratio of 11.53, while FIGS has a forward P/E of 3,002. We also note that CPRI has a PEG ratio of 0.20. 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. FIGS currently has a PEG ratio of 929.41.

Another notable valuation metric for CPRI is its P/B ratio of 3.56. 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, FIGS has a P/B of 22.37.

These metrics, and several others, help CPRI earn a Value grade of B, while FIGS has been given a Value grade of F.

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


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Capri Holdings Limited (CPRI) : Free Stock Analysis Report
 
FIGS, Inc. (FIGS) : Free Stock Analysis Report
 
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Zacks Investment Research