Investors interested in stocks from the Internet - Commerce sector have probably already heard of TripAdvisor (TRIP) and Chewy (CHWY). 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, TripAdvisor has a Zacks Rank of #2 (Buy), while Chewy 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 TRIP has an improving earnings outlook. 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.
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.
TRIP currently has a forward P/E ratio of 23.29, while CHWY has a forward P/E of 91.45. We also note that TRIP has a PEG ratio of 2.33. 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. CHWY currently has a PEG ratio of 9.67.
Another notable valuation metric for TRIP is its P/B ratio of 2.93. 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, CHWY has a P/B of 45.89.
Based on these metrics and many more, TRIP holds a Value grade of B, while CHWY has a Value grade of D.
TRIP has seen stronger estimate revision activity and sports more attractive valuation metrics than CHWY, so it seems like value investors will conclude that TRIP is the superior option right now.
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TripAdvisor, Inc. (TRIP): Free Stock Analysis Report Grupo Aeroportuario Del Pacifico, S.A. de C.V. (PAC): Free Stock Analysis Report American Water Works Company, Inc. (AWK): Free Stock Analysis Report Ladder Capital Corp (LADR): Free Stock Analysis Report Chewy (CHWY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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