Investors looking for stocks in the Internet - Commerce sector might want to consider either Commerce.com (CMRC) or Chewy (CHWY). 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.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.
Commerce.com has a Zacks Rank of #2 (Buy), while Chewy has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that CMRC is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture 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 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.
CMRC currently has a forward P/E ratio of 7.64, while CHWY has a forward P/E of 16.51. We also note that CMRC has a PEG ratio of 0.30. 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. CHWY currently has a PEG ratio of 0.90.
Another notable valuation metric for CMRC is its P/B ratio of 5.54. 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, CHWY has a P/B of 22.84.
These metrics, and several others, help CMRC earn a Value grade of B, while CHWY has been given a Value grade of C.
CMRC is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that CMRC is likely the superior value option right now.
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Commerce.com, Inc. (CMRC): Free Stock Analysis Report Chewy (CHWY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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