Investors with an interest in Hotels and Motels stocks have likely encountered both GreenTree Hospitality Group Ltd. Sponsored ADR (GHG - Free Report) and Huazhu Group (HTHT - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, GreenTree Hospitality Group Ltd. Sponsored ADR has a Zacks Rank of #1 (Strong Buy), while Huazhu Group has a Zacks Rank of #3 (Hold). This means that GHG's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.
GHG currently has a forward P/E ratio of 2.38, while HTHT has a forward P/E of 58.05. We also note that GHG has a PEG ratio of 0.14. 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. HTHT currently has a PEG ratio of 3.82.
Another notable valuation metric for GHG is its P/B ratio of 4.22. 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, HTHT has a P/B of 11.44.
These metrics, and several others, help GHG earn a Value grade of B, while HTHT has been given a Value grade of F.
GHG sticks out from HTHT in both our Zacks Rank and Style Scores models, so value investors will likely feel that GHG is the better option right now.