Investors interested in Internet - Commerce stocks are likely familiar with Expedia (EXPE - Free Report) and Amazon (AMZN - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, both Expedia and Amazon are sporting a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one piece of the puzzle for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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 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.
EXPE currently has a forward P/E ratio of 24.83, while AMZN has a forward P/E of 104.91. We also note that EXPE has a PEG ratio of 1.54. 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. AMZN currently has a PEG ratio of 3.96.
Another notable valuation metric for EXPE is its P/B ratio of 3.64. 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 24.77.
These are just a few of the metrics contributing to EXPE's Value grade of B and AMZN's Value grade of D.
Both EXPE and AMZN are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that EXPE is the superior value option right now.