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SKX vs. NKE: Which Stock Is the Better Value Option?

Investors with an interest in Shoes and Retail Apparel stocks have likely encountered both Skechers (SKX) and Nike (NKE). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Currently, Skechers has a Zacks Rank of #2 (Buy), while Nike has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that SKX likely has seen a stronger improvement to its earnings outlook than NKE has recently. But this is just one piece of the puzzle for value investors.

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.

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.

SKX currently has a forward P/E ratio of 12.45, while NKE has a forward P/E of 27.08. We also note that SKX has a PEG ratio of 1.78. 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. NKE currently has a PEG ratio of 2.22.

Another notable valuation metric for SKX is its P/B ratio of 1.65. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, NKE has a P/B of 12.57.

These metrics, and several others, help SKX earn a Value grade of B, while NKE has been given a Value grade of D.

SKX stands above NKE thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SKX is the superior value option right now.


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Skechers U.S.A., Inc. (SKX): Free Stock Analysis Report
 
NIKE, Inc. (NKE): Free Stock Analysis Report
 
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