Investors interested in stocks from the Internet - Content sector have probably already heard of Tencent Music Entertainment Group Sponsored ADR (TME) and TechTarget (TTGT). 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.
Tencent Music Entertainment Group Sponsored ADR has a Zacks Rank of #2 (Buy), while TechTarget has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that TME likely has seen a stronger improvement to its earnings outlook than TTGT has recently. However, value investors will care about much more than just this.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
TME currently has a forward P/E ratio of 17.35, while TTGT has a forward P/E of 18.02. We also note that TME has a PEG ratio of 0.81. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. TTGT currently has a PEG ratio of 10.12.
Another notable valuation metric for TME is its P/B ratio of 2.34. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, TTGT has a P/B of 3.51.
These metrics, and several others, help TME earn a Value grade of B, while TTGT has been given a Value grade of D.
TME stands above TTGT thanks to its solid earnings outlook, and based on these valuation figures, we also feel that TME is the superior value option right now.
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