Investors interested in stocks from the Internet - Services sector have probably already heard of Autohome Inc. (ATHM) and Etsy (ETSY). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Both Autohome Inc. and Etsy have a Zacks Rank of # 2 (Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. However, value investors will care about much more than just this.
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.
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.
ATHM currently has a forward P/E ratio of 16.83, while ETSY has a forward P/E of 142.61. We also note that ATHM has a PEG ratio of 1.10. 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. ETSY currently has a PEG ratio of 6.67.
Another notable valuation metric for ATHM is its P/B ratio of 3.99. 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, ETSY has a P/B of 16.16.
Based on these metrics and many more, ATHM holds a Value grade of B, while ETSY has a Value grade of D.
Both ATHM and ETSY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ATHM is the superior value option right now.
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Autohome Inc. (ATHM) : Free Stock Analysis Report
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