Investors interested in stocks from the Leisure and Recreation Services sector have probably already heard of Norwegian Cruise Line (NCLH) and Atour Lifestyle Holdings Limited Sponsored ADR (ATAT). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, both Norwegian Cruise Line and Atour Lifestyle Holdings Limited Sponsored ADR are holding a Zacks Rank of # 1 (Strong Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. 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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
NCLH currently has a forward P/E ratio of 15.54, while ATAT has a forward P/E of 21.68. We also note that NCLH has a PEG ratio of 0.26. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. ATAT currently has a PEG ratio of 0.63.
Another notable valuation metric for NCLH is its P/B ratio of 9.97. 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, ATAT has a P/B of 10.02.
These are just a few of the metrics contributing to NCLH's Value grade of A and ATAT's Value grade of C.
Both NCLH and ATAT are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that NCLH 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.
