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BABA vs. RVLV: Which Stock Is the Better Value Option?

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Investors interested in Internet - Commerce stocks are likely familiar with Alibaba (BABA - Free Report) and Revolve Group (RVLV - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.

Right now, Alibaba is sporting a Zacks Rank of #2 (Buy), while Revolve Group 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 BABA 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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

BABA currently has a forward P/E ratio of 16.25, while RVLV has a forward P/E of 28.25. We also note that BABA has a PEG ratio of 1.28. 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. RVLV currently has a PEG ratio of 5.60.

Another notable valuation metric for BABA is its P/B ratio of 2.05. 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, RVLV has a P/B of 4.78.

Based on these metrics and many more, BABA holds a Value grade of B, while RVLV has a Value grade of C.

BABA 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 BABA is likely the superior value option right now.


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Alibaba Group Holding Limited (BABA) - free report >>

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