Investors with an interest in Leisure and Recreation Services stocks have likely encountered both Avolta AG - Unsponsored ADR (DUFRY) and Viking Holdings (VIK). 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 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.
Avolta AG - Unsponsored ADR and Viking Holdings are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. This means that DUFRY's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
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.
DUFRY currently has a forward P/E ratio of 11.78, while VIK has a forward P/E of 24.67. We also note that DUFRY has a PEG ratio of 1.19. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. VIK currently has a PEG ratio of 1.51.
Another notable valuation metric for DUFRY is its P/B ratio of 3.21. 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, VIK has a P/B of 32.48.
These are just a few of the metrics contributing to DUFRY's Value grade of A and VIK's Value grade of C.
DUFRY sticks out from VIK in both our Zacks Rank and Style Scores models, so value investors will likely feel that DUFRY is the better 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.
