Credit: Shutterstock photoInvestors looking for stocks in the Internet - Commerce sector might want to consider either Expedia (EXPE) or Amazon (AMZN). 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.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, Expedia is sporting a Zacks Rank of #2 (Buy), while Amazon has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that EXPE is likely seeing its earnings outlook improve to a greater extent. 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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
EXPE currently has a forward P/E ratio of 17.08, while AMZN has a forward P/E of 62.28. We also note that EXPE has a PEG ratio of 1.04. 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. AMZN currently has a PEG ratio of 2.31.
Another notable valuation metric for EXPE is its P/B ratio of 2.88. 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 20.50.
These are just a few of the metrics contributing to EXPE's Value grade of B and AMZN's Value grade of F.
EXPE stands above AMZN thanks to its solid earnings outlook, and based on these valuation figures, we also feel that EXPE is the superior value option right now.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
