CMRC vs. CHWY: Which Stock Is the Better Value Option?

Investors interested in stocks from the Internet - Commerce sector have probably already heard of Commerce.com (CMRC) and Chewy (CHWY). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 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. Investors should feel comfortable knowing that CMRC likely has seen a stronger improvement to its earnings outlook than CHWY has recently. But this is just one factor that value investors are interested in.

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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

CMRC currently has a forward P/E ratio of 7.82, while CHWY has a forward P/E of 16.24. We also note that CMRC has a PEG ratio of 0.31. 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. CHWY currently has a PEG ratio of 0.88.

Another notable valuation metric for CMRC is its P/B ratio of 6.22. 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 22.46.

Based on these metrics and many more, CMRC holds a Value grade of B, while CHWY has 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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This article originally published on Zacks Investment Research (zacks.com).

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