Investors interested in Internet - Commerce stocks are likely familiar with Alibaba (BABA) and Global-e Online Ltd. (GLBE). But which of these two companies is the best option for those looking for undervalued stocks? 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Alibaba is sporting a Zacks Rank of #1 (Strong Buy), while Global-e Online Ltd. has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that BABA likely has seen a stronger improvement to its earnings outlook than GLBE has recently. 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.
BABA currently has a forward P/E ratio of 10.89, while GLBE has a forward P/E of 162.19. We also note that BABA has a PEG ratio of 0.36. 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. GLBE currently has a PEG ratio of 2.75.
Another notable valuation metric for BABA is its P/B ratio of 1.91. 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, GLBE has a P/B of 6.88.
These are just a few of the metrics contributing to BABA's Value grade of B and GLBE's Value grade of F.
BABA sticks out from GLBE in both our Zacks Rank and Style Scores models, so value investors will likely feel that BABA is the better option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Alibaba Group Holding Limited (BABA): Free Stock Analysis Report Global-e Online Ltd. (GLBE): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
