Investors interested in Hotels and Motels stocks are likely familiar with Marriot Vacations Worldwide Corporation (VAC - Free Report) and Huazhu Group (HTHT - 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.
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.
Marriot Vacations Worldwide Corporation and Huazhu Group are both sporting a Zacks Rank of # 2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. 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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
VAC currently has a forward P/E ratio of 10.70, while HTHT has a forward P/E of 35.95. We also note that VAC has a PEG ratio of 1.19. 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. HTHT currently has a PEG ratio of 2.83.
Another notable valuation metric for VAC is its P/B ratio of 1.16. 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, HTHT has a P/B of 9.02.
Based on these metrics and many more, VAC holds a Value grade of B, while HTHT has a Value grade of F.
Both VAC and HTHT are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that VAC is the superior value option right now.