ECHO vs. ZTO: Which Stock Is the Better Value Option?
Investors with an interest in Transportation - Services stocks have likely encountered both Echo Global Logistics (ECHO) and ZTO Express Cayman Inc. (ZTO). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 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.
Currently, Echo Global Logistics has a Zacks Rank of #2 (Buy), while ZTO Express Cayman Inc. has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that ECHO likely has seen a stronger improvement to its earnings outlook than ZTO has recently. However, value investors will care about much more than just this.
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.
ECHO currently has a forward P/E ratio of 29.80, while ZTO has a forward P/E of 35.13. We also note that ECHO has a PEG ratio of 1.66. 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. ZTO currently has a PEG ratio of 2.26.
Another notable valuation metric for ECHO is its P/B ratio of 1.67. 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, ZTO has a P/B of 3.97.
Based on these metrics and many more, ECHO holds a Value grade of A, while ZTO has a Value grade of D.
ECHO stands above ZTO thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ECHO is the superior value option right now.
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