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

Investors looking for stocks in the Leisure and Recreation Services sector might want to consider either Life Time Group Holdings, Inc. (LTH) or Atour Lifestyle Holdings Limited Sponsored ADR (ATAT). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, Life Time Group Holdings, Inc. is sporting a Zacks Rank of #2 (Buy), while Atour Lifestyle Holdings Limited Sponsored ADR has a Zacks Rank of #3 (Hold). This means that LTH'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 try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.

LTH currently has a forward P/E ratio of 17.89, while ATAT has a forward P/E of 26.95. We also note that LTH has a PEG ratio of 0.73. 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. ATAT currently has a PEG ratio of 1.15.

Another notable valuation metric for LTH is its P/B ratio of 1.97. 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, ATAT has a P/B of 11.25.

These are just a few of the metrics contributing to LTH's Value grade of A and ATAT's Value grade of C.

LTH stands above ATAT thanks to its solid earnings outlook, and based on these valuation figures, we also feel that LTH 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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