Investors looking for stocks in the Internet - Commerce sector might want to consider either Expedia (EXPE) or MercadoLibre (MELI). 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.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. 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.
Right now, Expedia is sporting a Zacks Rank of #1 (Strong Buy), while MercadoLibre has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that EXPE likely has seen a stronger improvement to its earnings outlook than MELI has recently. But this is just one factor that value investors are interested in.
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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
EXPE currently has a forward P/E ratio of 17.16, while MELI has a forward P/E of 51.26. We also note that EXPE has a PEG ratio of 0.97. 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 1.48.
Another notable valuation metric for EXPE is its P/B ratio of 12.24. 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 16.83.
Based on these metrics and many more, EXPE holds a Value grade of B, while MELI has a Value grade of C.
EXPE has seen stronger estimate revision activity and sports more attractive valuation metrics than MELI, so it seems like value investors will conclude that EXPE is the superior 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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