In 1997, Reebok (NYSE:RBK) achieved annual sales of $3.64 billion, just 40% of the sales its main rival, Nike (NYSE:NKE) racked up. Eight years later, it had $3.79 billion in sales, barely 31% of Nike's. Given that, plus all the positive press coverage of Nike in the past 12 months, why would anyone choose to invest in Reebok instead?

The simple answer is valuation. The Massachusetts-based underdog in the global sneaker wars is much less expensive than its West Coast rival. It can't compete in terms of margins or top- or bottom-line growth, but other numbers show a completely different story. The company's stock trades at a deep discount to Nike's in terms of the price-to-earnings, price-to-sales, price-to-book value, and price-to-cash flow ratios, as well as the PEG ratio. Take a closer look:

Reebok Nike
P/E 13.8 20.1
P/S 0.7 1.7
P/B 2.0 4.2
P/CF 10.9 15.6
PEG 0.9 1.2

The discounts range from a low of 25% to a high of 61%. You're looking at a substantial difference in the two valuations.

Has Nike really done this much better at delivering results? That answer is not immediately clear if you divide the last eight years into two four-year periods. Between 1997 and 2000, sales for Reebok shrunk by 21% while Nike's were down 2%. These obviously weren't memorable years for either company. However, the next four were far brighter. Reebok's sales grew by 32% and Nike's by 36%. These are numbers most mature companies would welcome.

How about earnings? The period from 1997 to 2000 shows Reebok and Nike with reductions of 40% and 27%, respectively. However, the next four years produced gains of 137% for Reebok and 63% at Nike. Given that Reebok's sales fell much further, it would make sense that the rise was bigger as well.

Remarkably, Reebok's stock has fared better despite the mediocre results between 1997 and 2000. If you had invested $10,000 at the end of 1997, it would have been worth a little over $15,000 in 2004, while the same amount invested in Nike over the same time period would have been worth $13,000. Now some might say that this is the premium you pay for a best of breed player like Nike, but I think Reebok was simply the better buy.

Some things never change.

Tom Gardner selected Reebok for Motley Fool Stock Advisor subscribers. To see which other companies have made the cut, subscribe today at a special rate of $149.

Fool contributor W ill Ashworth lives in the Great White North. He does not own either stock mentioned.