Investors with an interest in Textile - Apparel stocks have likely encountered both Gildan Activewear (GIL) and Lululemon (LULU). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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.

Gildan Activewear and Lululemon are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that GIL'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.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

GIL currently has a forward P/E ratio of 12.96, while LULU has a forward P/E of 21.97. We also note that GIL has a PEG ratio of 1.44. 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. LULU currently has a PEG ratio of 2.05.

Another notable valuation metric for GIL is its P/B ratio of 4.73. 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, LULU has a P/B of 10.31.

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

GIL sticks out from LULU in both our Zacks Rank and Style Scores models, so value investors will likely feel that GIL is the better option right now.

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Gildan Activewear, Inc. (GIL) : Free Stock Analysis Report

lululemon athletica inc. (LULU) : Free Stock Analysis Report

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

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