Investors interested in stocks from the Hotels and Motels sector have probably already heard of Marriot Vacations Worldwide Corporation (VAC) and Huazhu Group (HTHT). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Marriot Vacations Worldwide Corporation and Huazhu Group are sporting Zacks Ranks of #2 (Buy) and #5 (Strong Sell), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that VAC 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 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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
VAC currently has a forward P/E ratio of 12.53, while HTHT has a forward P/E of 44.65. We also note that VAC has a PEG ratio of 1.39. 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. HTHT currently has a PEG ratio of 3.51.
Another notable valuation metric for VAC is its P/B ratio of 1.30. 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, HTHT has a P/B of 10.53.
These metrics, and several others, help VAC earn a Value grade of B, while HTHT has been given a Value grade of F.
VAC 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 VAC is likely the superior value option right now.
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Marriot Vacations Worldwide Corporation (VAC) : Free Stock Analysis Report
China Lodging Group, Limited (HTHT) : Free Stock Analysis Report
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