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WUBA vs. RNG: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
·2 mins read

Investors looking for stocks in the Internet - Software and Services sector might want to consider either 58.com Inc. (WUBA) or RingCentral (RNG). 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.

Right now, 58.com Inc. is sporting a Zacks Rank of #2 (Buy), while RingCentral has a Zacks Rank of #4 (Sell). This means that WUBA's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.

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.

WUBA currently has a forward P/E ratio of 17.18, while RNG has a forward P/E of 315.50. We also note that WUBA has a PEG ratio of 0.82. 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. RNG currently has a PEG ratio of 18.17.

Another notable valuation metric for WUBA is its P/B ratio of 1.77. 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, RNG has a P/B of 51.67.

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

WUBA stands above RNG thanks to its solid earnings outlook, and based on these valuation figures, we also feel that WUBA is the superior value option right now.


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58.com Inc. (WUBA) : Free Stock Analysis Report
 
Ringcentral, Inc. (RNG) : Free Stock Analysis Report
 
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