U.S. Markets closed

EBAY vs. AMZN: Which Stock Is the Better Value Option?

Zacks Equity Research
First Defiance (FDEF) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

Investors interested in stocks from the Internet - Commerce sector have probably already heard of eBay (EBAY) and Amazon (AMZN). 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.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.

Right now, both eBay and Amazon are sporting a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is only part of the picture for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.

EBAY currently has a forward P/E ratio of 14.16, while AMZN has a forward P/E of 68.87. We also note that EBAY has a PEG ratio of 1.49. 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. AMZN currently has a PEG ratio of 2.21.

Another notable valuation metric for EBAY is its P/B ratio of 5.50. 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, AMZN has a P/B of 20.71.

These metrics, and several others, help EBAY earn a Value grade of B, while AMZN has been given a Value grade of C.

Both EBAY and AMZN are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that EBAY is the superior value option right now.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
eBay Inc. (EBAY) : Free Stock Analysis Report
 
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research