Investors interested in Leisure and Recreation Services stocks are likely familiar with 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.
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.
Currently, Carnival has a Zacks Rank of #2 (Buy), while Atour Lifestyle Holdings Limited Sponsored ADR has a Zacks Rank of #4 (Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that CCL is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.
CCL currently has a forward P/E ratio of 15.57, while ATAT has a forward P/E of 25.08. We also note that CCL has a PEG ratio of 0.70. 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 1.30.
Another notable valuation metric for CCL is its P/B ratio of 3.64. 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 11.63.
These are just a few of the metrics contributing to CCL's Value grade of A and ATAT's Value grade of C.
CCL has seen stronger estimate revision activity and sports more attractive valuation metrics than ATAT, so it seems like value investors will conclude that CCL is the superior option right now.
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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.
