Investors interested in Internet - Content stocks are likely familiar with China Distance (DL) and Yelp (YELP). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, China Distance is sporting a Zacks Rank of #1 (Strong 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 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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
DL currently has a forward P/E ratio of 10.23, while YELP has a forward P/E of 37.93. We also note that DL has a PEG ratio of 0.68. 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 1.81.
Another notable valuation metric for DL is its P/B ratio of 2.43. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, YELP has a P/B of 3.72.
Based on these metrics and many more, DL holds a Value grade of B, while YELP has a 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.
Click to get this free report China Distance Education Holdings Limited (DL) : Free Stock Analysis Report Yelp Inc. (YELP) : Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research