Investors interested in stocks from the Leisure and Recreation Services sector have probably already heard of Carnival (CCL) and Atour Lifestyle Holdings Limited Sponsored ADR (ATAT). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Carnival and Atour Lifestyle Holdings Limited Sponsored ADR are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. This means that CCL's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.
CCL currently has a forward P/E ratio of 14.88, while ATAT has a forward P/E of 20.88. We also note that CCL has a PEG ratio of 0.67. 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 0.96.
Another notable valuation metric for CCL is its P/B ratio of 3.47. 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 10.33.
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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Carnival Corporation (CCL): Free Stock Analysis Report Atour Lifestyle Holdings Limited Sponsored ADR (ATAT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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