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BIDU vs. SHOP: Which Stock Is the Better Value Option?

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Investors with an interest in Internet - Services stocks have likely encountered both Baidu Inc. (BIDU - Free Report) and Shopify (SHOP - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Currently, Baidu Inc. has a Zacks Rank of #2 (Buy), while Shopify has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that BIDU likely has seen a stronger improvement to its earnings outlook than SHOP has recently. However, value investors will care about much more than just this.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.

BIDU currently has a forward P/E ratio of 8.92, while SHOP has a forward P/E of 68.45. We also note that BIDU has a PEG ratio of 2.13. 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. SHOP currently has a PEG ratio of 3.02.

Another notable valuation metric for BIDU is its P/B ratio of 0.83. 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, SHOP has a P/B of 11.12.

These metrics, and several others, help BIDU earn a Value grade of A, while SHOP has been given a Value grade of F.

BIDU sticks out from SHOP in both our Zacks Rank and Style Scores models, so value investors will likely feel that BIDU is the better option right now.


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