Investors interested in Internet - Commerce stocks are likely familiar with Z HOLDINGS CP (YAHOY) and Amazon (AMZN). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Z HOLDINGS CP is sporting a Zacks Rank of #2 (Buy), while Amazon has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that YAHOY likely has seen a stronger improvement to its earnings outlook than AMZN has recently. But this is just one factor that value investors are interested in.
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.
YAHOY currently has a forward P/E ratio of 18.42, while AMZN has a forward P/E of 75.75. We also note that YAHOY has a PEG ratio of 1.23. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. AMZN currently has a PEG ratio of 2.31.
Another notable valuation metric for YAHOY is its P/B ratio of 1.95. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, AMZN has a P/B of 16.66.
These metrics, and several others, help YAHOY earn a Value grade of B, while AMZN has been given a Value grade of F.
YAHOY stands above AMZN thanks to its solid earnings outlook, and based on these valuation figures, we also feel that YAHOY is the superior value option right now.
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