Investors looking for stocks in the Internet - Commerce sector might want to consider either Expedia (EXPE) or MercadoLibre (MELI). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Expedia and MercadoLibre are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that EXPE is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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 14.74, while MELI has a forward P/E of 35.87. We also note that EXPE has a PEG ratio of 0.76. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. MELI currently has a PEG ratio of 1.06.
Another notable valuation metric for EXPE is its P/B ratio of 12.81. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, MELI has a P/B of 17.43.
These are just a few of the metrics contributing to EXPE's Value grade of B and MELI's Value grade of D.
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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