Investors interested in Internet - Commerce stocks are likely familiar with JD.com, Inc. (JD - Free Report) and MONOTARO (MONOY - Free Report) . 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, JD.com, Inc. has a Zacks Rank of #1 (Strong Buy), while MONOTARO has a Zacks Rank of #4 (Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that JD has an improving earnings outlook. However, value investors will care about much more than just this.
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.
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.
JD currently has a forward P/E ratio of 49.94, while MONOY has a forward P/E of 86.29. We also note that JD has a PEG ratio of 1.07. 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. MONOY currently has a PEG ratio of 4.99.
Another notable valuation metric for JD is its P/B ratio of 7.41. 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, MONOY has a P/B of 30.43.
Based on these metrics and many more, JD holds a Value grade of B, while MONOY has a Value grade of D.
JD 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 JD is likely the superior value option right now.