Investors looking for stocks in the Internet - Content sector might want to consider either YY (YY) or Yelp (YELP). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
YY and Yelp are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that YY has an improving earnings outlook. But this is just one factor that value investors are interested in.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
YY currently has a forward P/E ratio of 14.91, while YELP has a forward P/E of 48.79. We also note that YY has a PEG ratio of 1.05. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. YELP currently has a PEG ratio of 2.32.
Another notable valuation metric for YY is its P/B ratio of 0.84. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, YELP has a P/B of 3.15.
These are just a few of the metrics contributing to YY's Value grade of A and YELP's Value grade of C.
YY stands above YELP thanks to its solid earnings outlook, and based on these valuation figures, we also feel that YY is the superior value option right now.
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