TME vs. RELX: Which Stock Is the Better Value Option?
Investors interested in stocks from the Internet - Content sector have probably already heard of Tencent Music Entertainment Group Sponsored ADR (TME) and RELX PLC (RELX). 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.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Tencent Music Entertainment Group Sponsored ADR has a Zacks Rank of #2 (Buy), while RELX PLC has a Zacks Rank of #5 (Strong Sell). This means that TME's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
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 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.
TME currently has a forward P/E ratio of 13.04, while RELX has a forward P/E of 25.50. We also note that TME has a PEG ratio of 0.62. 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. RELX currently has a PEG ratio of 2.33.
Another notable valuation metric for TME 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, RELX has a P/B of 16.04.
These are just a few of the metrics contributing to TME's Value grade of B and RELX's Value grade of F.
TME sticks out from RELX in both our Zacks Rank and Style Scores models, so value investors will likely feel that TME is the better option right now.
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Tencent Music Entertainment Group Sponsored ADR (TME) : Free Stock Analysis Report
RELX PLC (RELX) : Free Stock Analysis Report
