Back to top

Image: Bigstock

GHG vs. HTHT: Which Stock Is the Better Value Option?

Read MoreHide Full Article

Investors looking for stocks in the Hotels and Motels sector might want to consider either GreenTree Hospitality Group Ltd. Sponsored ADR (GHG - Free Report) or Huazhu Group (HTHT - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

GreenTree Hospitality Group Ltd. Sponsored ADR and Huazhu Group are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. This means that GHG's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.

GHG currently has a forward P/E ratio of 2.31, while HTHT has a forward P/E of 49.11. We also note that GHG has a PEG ratio of 0.13. 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. HTHT currently has a PEG ratio of 3.23.

Another notable valuation metric for GHG is its P/B ratio of 4.21. 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, HTHT has a P/B of 9.70.

Based on these metrics and many more, GHG holds a Value grade of B, while HTHT has a Value grade of F.

GHG stands above HTHT thanks to its solid earnings outlook, and based on these valuation figures, we also feel that GHG is the superior value option right now.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


H World Group Limited Sponsored ADR (HTHT) - free report >>

GreenTree Hospitality Group Ltd. Sponsored ADR (GHG) - free report >>

Published in