Investors interested in stocks from the Leisure and Recreation Services sector have probably already heard of Carnival (CCL) and Airbnb, Inc. (ABNB). 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Carnival and Airbnb, Inc. 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 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 12.45, while ABNB has a forward P/E of 28.59. We also note that CCL has a PEG ratio of 0.55. 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. ABNB currently has a PEG ratio of 2.20.
Another notable valuation metric for CCL is its P/B ratio of 2.62. 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, ABNB has a P/B of 8.72.
Based on these metrics and many more, CCL holds a Value grade of A, while ABNB has a Value grade of C.
CCL stands above ABNB 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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Carnival Corporation (CCL): Free Stock Analysis Report Airbnb, Inc. (ABNB): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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