Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 5 stocks made the list for top value stocks in the Retailers - Apparel & Accessories industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Why Focus on Undervalued Retailers - Apparel & Accessories Stocks?

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.

What Goes Into AAII’s Value Grade?

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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5 Undervalued Retailers - Apparel & Accessories Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 5 undervalued stocks in the Retailers - Apparel & Accessories industry for Wednesday, June 26, 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.

AKA Brands Holding Corp’s Value Grade

Value Grade:

a.k.a. Brands Holding Corp. is a group of fashion brands for the consumers. The Company's brands share a common focus on Millennial and Gen Z consumers who seek fashion inspiration on social media and primarily shop online. It utilizes real-time data and consumer insights to identify the latest trends and work with its global sourcing network and brand partners to bring new products to market. It operates primarily in two geographies, the United States and Australia. It operates four brands: two women's brands, Princess Polly and Petal & Pup and two streetwear brands, Culture Kings and mnml. The brands offer its customers a curated assortment from third-party streetwear brands, as well as a large and growing portfolio of in-house designed brands and products that embody the relationship between music, sports, art and fashion. The Company's subsidiaries include a.k.a. Brands Intermediate Holding Corp., New Excelerate GP, Limited, AKA Brands, Inc., and CK Holdco Pty., Ltd., among others.

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.

AKA Brands Holding Corp has a Value Score of 75, which is considered to be undervalued.

When you look at AKA Brands Holding Corp’s price-to-sales ratio at 0.25 compared to the industry median at 0.47, this company has a lower price relative to revenue compared to its peers. This could make AKA Brands Holding Corp’s stock more attractive for value investors.

Now, let’s assess AKA Brands Holding Corp’s EV/EBITDA ratio, also known as enterprise multiple. At 35.1, when compared to the industry median of 7.9, the company may be considered overvalued 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. AKA Brands Holding Corp’s shareholder yield is higher than its industry median ratio of 1.50%. 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. AKA Brands Holding Corp’s price-to-book ratio is lower than its industry median ratio of 1.95. This could make AKA Brands Holding Corp more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at AKA Brands Holding Corp’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. AKA Brands Holding Corp’s price-to-free-cash-flow ratio is lower than its industry median ratio of 11.97. This could make AKA Brands Holding Corp more attractive because the lower P/FCF ratio indicates that AKA Brands Holding Corp 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.

Cato Corp’s Value Grade

Value Grade:

The Cato Corporation is a fashion specialty retailer. The Company operates through two segments: the operation of a fashion specialty stores segment (Retail Segment) and a credit card segment (Credit Segment). The Company's merchandise lines include dressy, career, and casual sportswear, dresses, coats, shoes, lingerie, costume jewelry, handbags, men's wear and lines for kids and infants. The apparel specialty stores operate under the names Cato, Cato Fashions, Cato Plus, Its Fashion, Its Fashion Metro and Versona, including e-commerce websites. The Versona brand stores and e-commerce Website offer quality fashion apparel items, jewelry and accessories at values every day. The Company offers its own credit cards to its customers and all credit authorizations, payment processing and collection efforts are performed by a wholly owned subsidiary of the Company. It operates approximately 1,178 fashion specialty stores in 31 states, principally in the southeastern United States.

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.

Cato Corp has a Value Score of 99, which is considered to be undervalued.

Cato Corp’s price-to-book ratio is higher than its peers. This could make Cato Corp less attractive for value investors when compared to the industry median at 1.95.

You can read more about Cato Corp’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.

Carter's Inc’s Value Grade

Value Grade:

Carter's, Inc. is a marketer of young children’s apparel in North America. Its segments include U.S. Retail, U.S. Wholesale, and International. The U.S. Retail segment includes sales of products in the United States through its retail stores and eCommerce websites. The U.S. Wholesale segment consists of sales in the United States of products to its wholesale partners. The International segment includes sales of products outside the United States, through its retail stores and eCommerce websites in Canada and Mexico, and sales to its international wholesale customers and licensees. It owns Carter’s and OshKosh B’gosh brands. These brands are sold in department stores, national chains, and specialty retailers domestically and internationally. They are also sold through nearly 1,000 Company-operated stores in the United States, Canada, and Mexico and online at www.carters.com, www.oshkosh.com, www.cartersoshkosh.ca, and www.carters.com.mx. It also owns Little Planet and Skip Hop brands.

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.

Carter's Inc has a Value Score of 77, which is considered to be undervalued.

Carter's Inc’s price-earnings ratio is 10.0 compared to the industry median at 13.7. This means that it has a lower price relative to its earnings compared to its peers. This makes Carter's Inc more attractive for value investors.

Carter's Inc’s price-to-book ratio is lower than its peers. This could make Carter's Inc more attractive for value investors when compared to the industry median at 1.95.

You can read more about Carter's 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.

Lands End Inc’s Value Grade

Value Grade:

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 83, 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 1.95.

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.

Tillys Inc’s Value Grade

Value Grade:

Tilly's, Inc. is a specialty retailer of casual apparel, footwear, accessories, and hardgoods for young men, young women, boys and girls. The Company’s stores are located in a variety of retail centers, including malls, lifestyle centers, power centers, community centers, outlet centers, and street-front locations. Customers may also shop online, where it features the same assortment of products as is carried in its stores, supplemented by additional online-only styles. The Company operates over 248 stores in 33 states. The Company's third-party brands include adidas, Champion, Dr. Martens, BDG, Converse, Edikted, Billabong, Crocs, Ethika, Birkenstock, Diamond Supply, Free People, Brixton, Dickies, G-Shock, Herschel Supply Co., HUF, Hydro Flask, Jansport, Levi's and others. It supplements its third-party merchandise assortment with its own proprietary brands across many of its product categories. It sells merchandise over the Internet through its e-commerce Website, www.tillys.com.

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.

Tillys Inc has a Value Score of 77, which is considered to be undervalued.

Tillys Inc’s price-to-book ratio is higher than its peers. This could make Tillys Inc less attractive for value investors when compared to the industry median at 1.95.

You can read more about Tillys 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.

Other Retailers - Apparel & Accessories Stock Grades

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 Retailers - Apparel & Accessories stocks as well as other industrys.

Choosing Which of the 5 Best Retailers - Apparel & Accessories Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• AKA Brands Holding Corp stock has a Value Grade of B.
• Cato Corp stock has a Value Grade of A.
• Carter's Inc stock has a Value Grade of B.
• Lands End Inc stock has a Value Grade of A.
• Tillys Inc stock has a Value Grade of B.

Now that you have a bit more background about each of the 5 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.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Retailers - Apparel & Accessories Stocks

Want to learn more about Retailers - Apparel & Accessories stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 5 Undervalued Retailers - Apparel & Accessories Stocks for Wednesday, June 26
• 5 Undervalued Retailers - Apparel & Accessories Stocks for Tuesday, June 25
• Why Lands End Inc’s (LE) Stock Is Up 6.19%
• Why Torrid Holdings Inc’s (CURV) Stock Is Up 4.69%

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