Investors with an interest in Internet - Commerce stocks have likely encountered both Expedia (EXPE) and MercadoLibre (MELI). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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, both Expedia and MercadoLibre are holding a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is just one piece of the puzzle for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.
EXPE currently has a forward P/E ratio of 9.56, while MELI has a forward P/E of 38.76. We also note that EXPE has a PEG ratio of 0.52. 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. MELI currently has a PEG ratio of 1.03.
Another notable valuation metric for EXPE is its P/B ratio of 6.53. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, MELI has a P/B of 21.45.
These are just a few of the metrics contributing to EXPE's Value grade of B and MELI's Value grade of D.
Both EXPE and MELI are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that EXPE is the superior value option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Expedia Group, Inc. (EXPE): Free Stock Analysis Report MercadoLibre, Inc. (MELI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
