CCL vs. ATAT: Which Stock Should Value Investors Buy Now?

Investors with an interest in Leisure and Recreation Services stocks have likely encountered both Carnival (CCL) 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.

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.

Currently, Carnival has a Zacks Rank of #2 (Buy), while Atour Lifestyle Holdings Limited Sponsored ADR has a Zacks Rank of #3 (Hold). This means that CCL's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

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.

CCL currently has a forward P/E ratio of 14.62, while ATAT has a forward P/E of 22.18. We also note that CCL has a PEG ratio of 0.64. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. ATAT currently has a PEG ratio of 1.02.

Another notable valuation metric for CCL is its P/B ratio of 3.38. 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 10.97.

These metrics, and several others, help CCL earn a Value grade of A, while ATAT has been given a Value grade of C.

CCL is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that CCL is likely the superior value option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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