Investors interested in Internet - Content stocks are likely familiar with China Distance (DL - Free Report) and Yelp (YELP - 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.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.
Currently, China Distance has a Zacks Rank of #1 (Strong Buy), while Yelp has a Zacks Rank of #3 (Hold). This means that DL's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
DL currently has a forward P/E ratio of 8.96, while YELP has a forward P/E of 29.84. We also note that DL has a PEG ratio of 0.60. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. YELP currently has a PEG ratio of 1.42.
Another notable valuation metric for DL is its P/B ratio of 2.15. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, YELP has a P/B of 2.62.
These are just a few of the metrics contributing to DL's Value grade of A and YELP's Value grade of C.
DL is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that DL is likely the superior value option right now.