3 Undervalued Apparel & Accessories Stocks for Friday, April 26 (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 3 undervalued stocks in the Apparel & Accessories industry for Friday, April 26, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the 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.

G-III Apparel Group, Ltd. designs, sources and markets a range of apparel, including outerwear, dresses, sportswear, swimwear, women’s suits and women’s performance wear, as well as women’s handbags, footwear, small leather goods, cold weather accessories and luggage. Its segments include wholesale operations and retail operations. The wholesale operations segment includes sales of products to retailers under owned, licensed and private label brands, as well as sales related to the Vilebrequin and Karl Lagerfeld businesses, other than sales of products under the Karl Lagerfeld Paris brand from its retail stores and digital outlets. The retail operations segment consists primarily of direct sales to consumers through its Company-operated stores and through digital channels. Its Company-operated retail channels consist primarily of DKNY and Karl Lagerfeld Paris stores, as well as the digital channels for DKNY, Donna Karan, Karl Lagerfeld Paris, G.H. Bass, Andrew Marc and Wilsons Leather.

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.

G-III Apparel Group Ltd has a Value Score of 98, which is considered to be undervalued.

When you look at G-III Apparel Group Ltd’s price-to-sales ratio at 0.42 compared to the industry median at 0.61, this company has a lower price relative to revenue compared to its peers. This could make G-III Apparel Group Ltd’s stock more attractive for value investors.

G-III Apparel Group Ltd’s price-earnings ratio is 7.55 compared to the industry median at 20.40. This means it has a lower share price relative to earnings compared to its peers. This could make G-III Apparel Group Ltd more attractive for value investors.

Now, let’s assess G-III Apparel Group Ltd’s EV/EBITDA ratio, also known as enterprise multiple. At 4.0, when compared to the industry median of 9.0, 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. G-III Apparel Group Ltd’s shareholder yield is higher than its industry median ratio of 1.52%. 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. G-III Apparel Group Ltd’s price-to-book ratio is lower than its industry median ratio of 1.36. This could make G-III Apparel Group Ltd more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at G-III Apparel Group Ltd’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. G-III Apparel Group Ltd’s price-to-free-cash-flow ratio is lower than its industry median ratio of 12.97. This could make G-III Apparel Group Ltd more attractive because the lower P/FCF ratio indicates that G-III Apparel Group Ltd 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.

Tefron Ltd. focuses on the development, production, marketing and sale of intimate apparel and activewear. The Company operates through two segments: Brands and Retail. The Brands segment is engaged in the design, development, production and marketing of seamless intimate apparel and activewear, and leisurewear, which are manufactured in the Company's plants and through subcontractors, and are sold to customers through brands. The Retail segment is involved in the design, development, production and marketing of seamless intimate apparel and activewear, and leisurewear, which are sold around the world to customers in the retail market. Its production operations are carried out in plants located in Israel, Jordan and the Far East. The Company's subsidiaries include Macro Clothing Ltd, Tefron Canada Inc., Tefron Holdings (98) Ltd. and Tefron USA Inc.

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.

Tefron Ltd has a Value Score of 99, which is considered to be undervalued.

Tefron Ltd’s price-earnings ratio is 6.4 compared to the industry median at 20.4. This means that it has a lower price relative to its earnings compared to its peers. This makes Tefron Ltd more attractive for value investors.

Tefron Ltd’s price-to-book ratio is higher than its peers. This could make Tefron Ltd less attractive for value investors when compared to the industry median at 1.36.

You can read more about Tefron 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.

Vera Bradley, Inc. is a designer of women's handbags, luggage and other travel items, fashion, and home accessories. The Company operates through three segments: Vera Bradley Direct (VB Direct), Vera Bradley Indirect (VB Indirect), and Pura Vida. The VB Direct business consists of sales of Vera Bradley products through Vera Bradley full-line and factory outlet stores in the United States; e-commerce sites verabradley.com and verabradley.ca; the Vera Bradley online outlet site; and typically, the Vera Bradley annual outlet sale in Fort Wayne, Indiana. The VB Indirect business consists of sales of Vera Bradley products to, specialty retail locations, all of which are located in the United States; as well as department stores, national accounts, third-party e-commerce sites, and third-party inventory liquidators; and royalties recognized through licensing agreements related to the Vera Bradley brand. Its Pura Vida is a digitally native lifestyle brand.

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.

Vera Bradley, Inc. has a Value Score of 84, which is considered to be undervalued.

Vera Bradley, Inc.’s price-earnings ratio is 26.9 compared to the industry median at 20.4. This means that it has a higher price relative to its earnings compared to its peers. This makes Vera Bradley, Inc. less attractive for value investors.

Vera Bradley, Inc.’s price-to-book ratio is higher than its peers. This could make Vera Bradley, Inc. less attractive for value investors when compared to the industry median at 1.36.

You can read more about Vera Bradley, 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.

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.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Apparel & Accessories stocks as well as other industrys.

Now that you have a bit more background about each of the 3 undervalued stocks in the 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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