4 Undervalued Retailers - Apparel & Accessories Stocks for Thursday, April 18 (2024)

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 4 undervalued stocks in the Retailers - Apparel & Accessories industry for Thursday, April 18, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Retailers - Apparel & Accessories industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Guess?, Inc. designs, markets, distributes and licenses lifestyle collections of apparel and accessories for men, women and children. The Company’s segments include Europe, Americas Retail, Americas Wholesale, Asia, and Licensing. The Europe segment sells its products through direct-to-consumer and wholesale channels throughout Europe and the Middle East. Its European direct-to-consumer network is comprised of brick-and-mortar retail stores and concessions and e-commerce sites. The Americas Retail segment sells its products direct-to-consumer through a network of directly operated retail and factory outlet stores and e-commerce sites in the Americas. The Wholesale segment sells its products through wholesale channels throughout the Americas and to third-party distributors based in Central and South America as well as licensed retail locations operated by its wholesale partners. The Licensing segment includes its worldwide licensing operations.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Guess? Inc has a Value Score of 90, which is considered to be undervalued.

When you look at Guess? Inc’s price-to-sales ratio at 0.49 compared to the industry median at 0.47, this company has a higher price relative to revenue compared to its peers. This could make Guess? Inc’s stock less attractive for value investors.

Guess? Inc’s price-earnings ratio is 8.61 compared to the industry median at 12.20. This means it has a lower share price relative to earnings compared to its peers. This could make Guess? Inc more attractive for value investors.

Now, let’s assess Guess? Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 4.5, when compared to the industry median of 7.0, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Guess? Inc’s shareholder yield is higher than its industry median ratio of 1.27%. Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Guess? Inc’s price-to-book ratio is higher than its industry median ratio of 1.97. This could make Guess? Inc fairly attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Guess? Inc’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Guess? Inc’s price-to-free-cash-flow ratio is lower than its industry median ratio of 11.76. This could make Guess? Inc more attractive because the lower P/FCF ratio indicates that Guess? Inc is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

Lands' End, Inc. is a digital retailer of solution-based apparel, swimwear, outerwear, accessories, footwear, home products and uniforms. The Company's segments include U.S. eCommerce, Europe eCommerce, Japan eCommerce, Outfitters, Third Party, and Retail. It has five distribution channels, which include U.S. eCommerce, International, Outfitters, Third Party and Retail. Its U.S. eCommerce offers products through its e-commerce Website. Its International offers products primarily to consumers located in Europe and Japan through e-commerce international Websites and third-party affiliates. Its Outfitters sells uniform and logo apparel to businesses and their employees, as well as to student households through school relationships, located primarily in the United States. Its Third Party sells the same products as U.S. eCommerce direct to consumers through third-party marketplace Websites and through domestic wholesale customers. Its Retail sells products through Company-operated stores.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Lands End Inc has a Value Score of 92, which is considered to be undervalued.

Lands End Inc’s price-to-book ratio is higher than its peers. This could make Lands End Inc less attractive for value investors when compared to the industry median at 1.97.

You can read more about Lands End Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Lulu's Fashion Lounge Holdings, Inc. is an attainable luxury fashion brand for women. The Company primarily serves Millennial and Gen Z women. The Company operates through a single segment, which is Retail. The Company is focused on giving its customers what they want by using direct consumer feedback and insights to refine product offerings. Its Website (www.lulus.com), mobile app, merchandising, customer, order, and warehouse management systems are proprietary, purpose-built solutions. It operates three leased distribution facilities: a facility located in Chico, California; a facility located in Easton, Pennsylvania, and a facility located in Ontario, California. Its trademarks, including LULUS and Graphic, are registered with the United States Patent and Trademark Office. It also owns the registrations for LULU'S, LOVELULUS, and COVETED CURATED COLLECTED.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Lulu's Fashion Lounge Holdings Inc has a Value Score of 89, which is considered to be undervalued.

Lulu's Fashion Lounge Holdings Inc’s price-to-book ratio is higher than its peers. This could make Lulu's Fashion Lounge Holdings Inc less attractive for value investors when compared to the industry median at 1.97.

You can read more about Lulu's Fashion Lounge Holdings Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Signet Jewelers Ltd is a Bermuda-based holding company. The Company is a retailer of diamond jewelry. Its segments include North America, International and Other. The North America segment operates across the United States and Canada. Its United States stores operate nationally in malls and off-mall locations, as well as online, principally as Kay (Kay Jewelers and Kay Outlet), Zales (Zales Jewelers and Zales Outlet), Jared (Jared The Galleria Of Jewelry and Jared Vault), Diamonds Direct, Banter by Piercing Pagoda, Rocksbox, and digital banners, James Allen and Blue Nile. Its Canadian stores operate as Peoples Jewellers. The International segment operates stores in the United Kingdom, Republic of Ireland and Channel Islands, as well as online. Its stores operate in shopping malls and off-mall locations principally under the H. Samuel and Ernest Jones banners. Other segment consists of subsidiaries involved in the purchasing and conversion of rough diamonds to polished stones.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Signet Jewelers Ltd has a Value Score of 85, which is considered to be undervalued.

Signet Jewelers Ltd’s price-earnings ratio is 6.6 compared to the industry median at 12.2. This means that it has a lower price relative to its earnings compared to its peers. This makes Signet Jewelers Ltd more attractive for value investors.

Signet Jewelers Ltd’s price-to-book ratio is lower than its peers. This could make Signet Jewelers Ltd fairly attractive for value investors when compared to the industry median at 1.97.

You can read more about Signet Jewelers Ltd’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

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Now that you have a bit more background about each of the 4 undervalued stocks in the Retailers - Apparel & Accessories industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

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