Investors interested in Internet - Commerce stocks are likely familiar with Expedia (EXPE) and MercadoLibre (MELI). But which of these two stocks presents investors with the better value opportunity right now? 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Expedia has a Zacks Rank of #2 (Buy), while MercadoLibre has a Zacks Rank of #4 (Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that EXPE has an improving earnings outlook. But this is only part of the picture for value investors.
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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
EXPE currently has a forward P/E ratio of 18.02, while MELI has a forward P/E of 52.36. We also note that EXPE has a PEG ratio of 1.08. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. MELI currently has a PEG ratio of 1.51.
Another notable valuation metric for EXPE is its P/B ratio of 12.32. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, MELI has a P/B of 17.19.
These are just a few of the metrics contributing to EXPE's Value grade of B and MELI's Value grade of D.
EXPE stands above MELI thanks to its solid earnings outlook, and based on these valuation figures, we also feel that EXPE is the superior value option right now.
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Expedia Group, Inc. (EXPE): Free Stock Analysis Report MercadoLibre, Inc. (MELI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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