Investors interested in stocks from the Internet - Commerce sector have probably already heard of Expedia (EXPE) and 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.
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.
Right now, Expedia is sporting a Zacks Rank of #2 (Buy), while MercadoLibre has a Zacks Rank of #3 (Hold). 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 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.
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 13.17, while MELI has a forward P/E of 34.05. We also note that EXPE has a PEG ratio of 0.67. 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. MELI currently has a PEG ratio of 1.01.
Another notable valuation metric for EXPE is its P/B ratio of 11.41. 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, MELI has a P/B of 16.51.
These metrics, and several others, help EXPE earn a Value grade of B, while MELI has been given a Value grade of C.
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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