Investors looking for stocks in the Internet - Commerce sector might want to consider either Stamps.com (STMP) or MONOTARO (MONOY). 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Stamps.com is sporting a Zacks Rank of #1 (Strong Buy), while MONOTARO has a Zacks Rank of #2 (Buy). Investors should feel comfortable knowing that STMP likely has seen a stronger improvement to its earnings outlook than MONOY has recently. 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 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.
STMP currently has a forward P/E ratio of 22.13, while MONOY has a forward P/E of 64.65. We also note that STMP has a PEG ratio of 1.48. 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. MONOY currently has a PEG ratio of 3.38.
Another notable valuation metric for STMP is its P/B ratio of 2.42. 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, MONOY has a P/B of 25.43.
These metrics, and several others, help STMP earn a Value grade of A, while MONOY has been given a Value grade of F.
STMP 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 STMP is likely the superior value option right now.
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