Investors interested in stocks from the Leisure and Recreation Services sector have probably already heard of Royal Caribbean (RCL) and Atour Lifestyle Holdings Limited Sponsored ADR (ATAT). But which of these two companies is the best option for those looking for undervalued stocks? 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Royal Caribbean and Atour Lifestyle Holdings Limited Sponsored ADR are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that RCL is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.
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.
RCL currently has a forward P/E ratio of 18.17, while ATAT has a forward P/E of 21.87. We also note that RCL has a PEG ratio of 0.56. 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. ATAT currently has a PEG ratio of 0.64.
Another notable valuation metric for RCL is its P/B ratio of 7.84. 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, ATAT has a P/B of 10.02.
These are just a few of the metrics contributing to RCL's Value grade of B and ATAT's Value grade of C.
RCL stands above ATAT thanks to its solid earnings outlook, and based on these valuation figures, we also feel that RCL is the superior value option right now.
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See This Stock Now for Free >>Royal Caribbean Cruises Ltd. (RCL) : Free Stock Analysis Report
Atour Lifestyle Holdings Limited Sponsored ADR (ATAT) : Free Stock Analysis Report
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