Australia markets closed

HGV vs. HTHT: Which Stock Is the Better Value Option?

Zacks Equity Research

Investors interested in Hotels and Motels stocks are likely familiar with Hilton Grand Vacations Inc. (HGV) and Huazhu Group (HTHT). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Hilton Grand Vacations Inc. and Huazhu Group are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. Investors should feel comfortable knowing that HGV likely has seen a stronger improvement to its earnings outlook than HTHT has recently. However, value investors will care about much more than just this.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

HGV currently has a forward P/E ratio of 10.66, while HTHT has a forward P/E of 36.72. We also note that HGV has a PEG ratio of 1.18. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. HTHT currently has a PEG ratio of 2.63.

Another notable valuation metric for HGV is its P/B ratio of 5.50. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, HTHT has a P/B of 9.53.

Based on these metrics and many more, HGV holds a Value grade of B, while HTHT has a Value grade of F.

HGV sticks out from HTHT in both our Zacks Rank and Style Scores models, so value investors will likely feel that HGV is the better option right now.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Hilton Grand Vacations Inc. (HGV) : Free Stock Analysis Report
 
China Lodging Group, Limited (HTHT) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.