Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 3 stocks made the list for top value stocks in the 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.

Latest Apparel & Accessories Stock News

Before choosing which top Apparel & Accessories stock to buy, be sure to conduct proper due diligence: analyze various financial metrics and look at historical data, public statements and news coverage.

The outlook for the apparel, accessories, and luxury goods is neutral. Analysts forecast a major shift in consumer spending in the latter half of 2021. As a result, more retailers are expected to go out of business. Reacting to an increased threat of store closures and bloated inventories, manufacturers will have significant order cutback, causing a supply chain shock. These same suppliers will struggle to keep a handle on their expenses such as wages, overhead, and raw materials costs. More and more, apparel brands are redefining the way they interact with their customers and the consumer experience. This likely involves cutting out the middleman going forward. There are major benefits to this approach however, such as building more personal relationships with apparel brands’ client base, maximizing margins, and tailoring market strategies to the ideal demographic. Additionally, apparel makers seek to utilize AI technology in their stores, allowing customers to see how items of clothing fit virtual mannequins or themselves before making the purchase. Early results from Zeekit show a 36% reduction in customer return rates due to this technology. Analysts forecast private label dollar share and units sold hitting 40% in 2021, which would reflect a more than six percentage point growth since 2017.

Why Focus on Undervalued 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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3 Undervalued Apparel & Accessories Stocks

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, August 11, 2023. 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’s Value Grade

Value Grade:

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 94, which is considered to be undervalued.

When you look at G-III Apparel Group Ltd’s price-to-sales ratio at 0.32 compared to the industry median at 0.68, 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.

Now, let’s assess G-III Apparel Group Ltd’s EV/EBITDA ratio, also known as enterprise multiple. At 4.1, when compared to the industry median of 9.2, 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 0.65%. 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 1.77. 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 28.22. 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’s Value Grade

Value Grade:

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 96, which is considered to be undervalued.

Tefron Ltd’s price-earnings ratio is 7.8 compared to the industry median at 16.1. 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 1.77.

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.

Wacoal Holdings Corporation (ADR)’s Value Grade

Value Grade:

WACOAL HOLDINGS CORP. is a holding company mainly engaged in the manufacturing and wholesale of innerwear, which include women's foundation wear, lingerie, nightwear and children's underwear; outerwear; sportswear, and other textile goods and related products, as well as the direct sale of certain products to consumers. The Company has four segments: Wacoal business (Domestic), Wacoal business (Overseas), Peach John Business and Other. The Wacoal Business (Domestic) segment is engaged in the planning, design of products, the procurement of raw materials, as well as the provision of products to end consumers through domestic department stores, mass retailers and other general retail stores, directly managed stores, e-commerce sites and domestic and overseas sales companies. The Wacoal Business (Overseas) segment manufactures, sells products such as innerwear. The Peach John Business segment retails products. The Others segment include the manufacture and sale of mannequin dolls.

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.

Wacoal Holdings Corporation (ADR) has a Value Score of 79, which is considered to be undervalued.

Wacoal Holdings Corporation (ADR)’s price-to-book ratio is higher than its peers. This could make Wacoal Holdings Corporation (ADR) less attractive for value investors when compared to the industry median at 1.77.

You can read more about Wacoal Holdings Corporation (ADR)’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 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 Apparel & Accessories stocks as well as other industrys.

Choosing Which of the 3 Best 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.

• G-III Apparel Group Ltd stock has a Value Grade of A.
• Tefron Ltd stock has a Value Grade of A.
• Wacoal Holdings Corporation (ADR) stock has a Value Grade of B.

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.

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 Apparel & Accessories Stocks

Want to learn more about 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.

• 3 Undervalued Apparel & Accessories Stocks for Friday, August 11
• What You Need to Know About Hanesbrands Inc.'s Q2 Earnings
• What You Need to Know About Ralph Lauren Corp's Q1 Earnings
• What You Need to Know About Under Armour Inc's Q1 Earnings

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