Investors with an interest in Internet - Services stocks have likely encountered both Baidu Inc. (BIDU) and HealthStream (HSTM). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Baidu Inc. and HealthStream are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that BIDU likely has seen a stronger improvement to its earnings outlook than HSTM has recently. But this is just one piece of the puzzle for value investors.

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.

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.

BIDU currently has a forward P/E ratio of 9.09, while HSTM has a forward P/E of 51.23. We also note that BIDU has a PEG ratio of 2.17. 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. HSTM currently has a PEG ratio of 4.27.

Another notable valuation metric for BIDU is its P/B ratio of 0.81. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, HSTM has a P/B of 2.85.

Based on these metrics and many more, BIDU holds a Value grade of A, while HSTM has a Value grade of D.

BIDU has seen stronger estimate revision activity and sports more attractive valuation metrics than HSTM, so it seems like value investors will conclude that BIDU is the superior option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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