Investors with an interest in Internet - Content stocks have likely encountered both China Distance (DL) and Yelp (YELP). 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.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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, China Distance has a Zacks Rank of #2 (Buy), while Yelp 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 DL has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
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.
DL currently has a forward P/E ratio of 7.21, while YELP has a forward P/E of 51.07. We also note that DL has a PEG ratio of 0.48. 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 2.06.
Another notable valuation metric for DL is its P/B ratio of 1.18. 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, YELP has a P/B of 3.58.
These are just a few of the metrics contributing to DL's Value grade of A and YELP's Value grade of D.
DL sticks out from YELP in both our Zacks Rank and Style Scores models, so value investors will likely feel that DL is the better option right now.
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China Distance Education Holdings Limited (DL) : Free Stock Analysis Report
Yelp Inc. (YELP) : Free Stock Analysis Report
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