Investors with an interest in Leisure and Recreation Services stocks have likely encountered both Carnival (CCL) and Atour Lifestyle Holdings Limited Sponsored ADR (ATAT). 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.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, both Carnival and Atour Lifestyle Holdings Limited Sponsored ADR are holding a Zacks Rank of #2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. 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 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.
CCL currently has a forward P/E ratio of 13.88, while ATAT has a forward P/E of 20.47. We also note that CCL has a PEG ratio of 0.61. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. ATAT currently has a PEG ratio of 0.94.
Another notable valuation metric for CCL is its P/B ratio of 3.18. 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, ATAT has a P/B of 10.
Based on these metrics and many more, CCL holds a Value grade of A, while ATAT has a Value grade of C.
Both CCL and ATAT are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CCL is the superior value option right now.
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Atour Lifestyle Holdings Limited Sponsored ADR (ATAT) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
