Investors interested in Internet - Commerce stocks are likely familiar with Alibaba (BABA) and Maplebear (CART). 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.
Right now, Alibaba is sporting a Zacks Rank of #1 (Strong Buy), while Maplebear has a Zacks Rank of #2 (Buy). Investors should feel comfortable knowing that BABA likely has seen a stronger improvement to its earnings outlook than CART has recently. But this is just one factor that value investors are interested in.
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.
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.
BABA currently has a forward P/E ratio of 9.15, while CART has a forward P/E of 30.50. We also note that BABA has a PEG ratio of 0.38. 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. CART currently has a PEG ratio of 1.11.
Another notable valuation metric for BABA is its P/B ratio of 1.40. 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, CART has a P/B of 3.88.
Based on these metrics and many more, BABA holds a Value grade of A, while CART has a Value grade of C.
BABA stands above CART thanks to its solid earnings outlook, and based on these valuation figures, we also feel that BABA is the superior value option right now.
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