CCL vs. ATAT: Which Stock Is the Better Value Option?

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 offers value investors a better bang for their buck right now? We'll need to 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 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 #2 (Buy) and #4 (Sell), 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 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.

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 15.66, while ATAT has a forward P/E of 25.63. We also note that CCL has a PEG ratio of 0.70. 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 1.33.

Another notable valuation metric for CCL is its P/B ratio of 3.67. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, ATAT has a P/B of 11.88.

Based on these metrics and many more, CCL holds a Value grade of A, while ATAT has a Value grade of C.

CCL stands above ATAT thanks to its solid earnings outlook, and based on these valuation figures, we also feel that CCL is the superior value option right now.

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

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