Investors looking for stocks in the Internet – Commerce sector might want to consider either eBay (EBAY) or Amazon (AMZN). But which of these two stocks is more attractive to value investors? We’ll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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.
eBay has a Zacks Rank of #1 (Strong Buy), while Amazon has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that EBAY has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
EBAY currently has a forward P/E ratio of 16.28, while AMZN has a forward P/E of 155.28. We also note that EBAY has a PEG ratio of 1.39. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company’s expected EPS growth rate. AMZN currently has a PEG ratio of 5.76.
Another notable valuation metric for EBAY is its P/B ratio of 18.75. 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, AMZN has a P/B of 23.98.
These are just a few of the metrics contributing to EBAY’s Value grade of B and AMZN’s Value grade of D.
EBAY 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 EBAY is likely the superior value option right now.
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