Investors with an interest in Internet - Commerce stocks have likely encountered both Cars.com (CARS) and MONOTARO (MONOY). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Cars.com has a Zacks Rank of #2 (Buy), while MONOTARO has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that CARS is likely seeing its earnings outlook improve to a greater extent. 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.
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.
CARS currently has a forward P/E ratio of 12.92, while MONOY has a forward P/E of 58.64. We also note that CARS has a PEG ratio of 2.58. 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. MONOY currently has a PEG ratio of 2.73.
Another notable valuation metric for CARS is its P/B ratio of 0.89. 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, MONOY has a P/B of 22.73.
These metrics, and several others, help CARS earn a Value grade of B, while MONOY has been given a Value grade of D.
CARS 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 CARS is likely the superior value option right now.
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Cars.com Inc. (CARS) : Free Stock Analysis Report
MONOTARO (MONOY) : Free Stock Analysis Report
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