Investors with an interest in Internet - Commerce stocks have likely encountered both Expedia (EXPE - Free Report) and Amazon (AMZN - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 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.
Both Expedia and Amazon have a Zacks Rank of #2 (Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one factor that value investors are interested in.
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 grades stocks based on a number of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
EXPE currently has a forward P/E ratio of 22.50, while AMZN has a forward P/E of 126.76. We also note that EXPE has a PEG ratio of 1.55. 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. AMZN currently has a PEG ratio of 4.20.
Another notable valuation metric for EXPE is its P/B ratio of 3.06. 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, AMZN has a P/B of 25.06.
Based on these metrics and many more, EXPE holds a Value grade of A, while AMZN has a Value grade of F.
Both EXPE and AMZN are impressive stocks with improving earnings outlooks. But considering the above metrics, value investors will likely feel that EXPE is the better option right now.