Investors with an interest in Internet - Content stocks have likely encountered both China Distance (DL) and Yelp (YELP). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 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 #2 (Buy), while Yelp has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that DL 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 analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
DL currently has a forward P/E ratio of 9.39, while YELP has a forward P/E of 44.52. We also note that DL has a PEG ratio of 0.63. 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. YELP currently has a PEG ratio of 1.79.
Another notable valuation metric for DL is its P/B ratio of 1.51. 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 2.43.
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.
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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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