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ELY vs. ONON: Which Stock Should Value Investors Buy Now?

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Investors interested in stocks from the Leisure and Recreation Products sector have probably already heard of Callaway Golf (ELY) and On Holding (ONON). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, both Callaway Golf and On Holding are holding a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is only part of the picture for value investors.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.

ELY currently has a forward P/E ratio of 25.68, while ONON has a forward P/E of 218.24. We also note that ELY has a PEG ratio of 1.29. 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. ONON currently has a PEG ratio of 4.37.

Another notable valuation metric for ELY is its P/B ratio of 1.02. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, ONON has a P/B of 12.14.

These metrics, and several others, help ELY earn a Value grade of B, while ONON has been given a Value grade of F.

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


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Callaway Golf Company (ELY) : Free Stock Analysis Report
 
On Holding AG (ONON) : Free Stock Analysis Report
 
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Zacks Investment Research