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YY vs. HSTM: Which Stock Is the Better Value Option?

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Investors with an interest in Internet - Services stocks have likely encountered both JOYY (YY - Free Report) and HealthStream (HSTM - 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.

Currently, JOYY has a Zacks Rank of #2 (Buy), while HealthStream has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that YY has an improving earnings outlook. However, value investors will care about much more than just this.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.

YY currently has a forward P/E ratio of 13.77, while HSTM has a forward P/E of 87.58. We also note that YY has a PEG ratio of 2.77. 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. HSTM currently has a PEG ratio of 8.76.

Another notable valuation metric for YY is its P/B ratio of 0.76. 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, HSTM has a P/B of 2.32.

These are just a few of the metrics contributing to YY's Value grade of A and HSTM's Value grade of D.

YY sticks out from HSTM in both our Zacks Rank and Style Scores models, so value investors will likely feel that YY is the better option right now.


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