EYE vs. LRLCY: Which Stock Is the Better Value Option?

Investors interested in stocks from the Consumer Products - Staples sector have probably already heard of National Vision (EYE) and L'Oreal SA (LRLCY). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

National Vision and L'Oreal SA are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that EYE likely has seen a stronger improvement to its earnings outlook than LRLCY has recently. However, value investors will care about much more than just this.

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.

EYE currently has a forward P/E ratio of 18.65, while LRLCY has a forward P/E of 28.79. We also note that EYE has a PEG ratio of 0.96. 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. LRLCY currently has a PEG ratio of 3.37.

Another notable valuation metric for EYE is its P/B ratio of 1.63. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, LRLCY has a P/B of 6.16.

These are just a few of the metrics contributing to EYE's Value grade of B and LRLCY's Value grade of F.

EYE is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that EYE is likely the superior value option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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