Investors with an interest in Leisure and Recreation Services stocks have likely encountered both Life Time Group Holdings, Inc. (LTH) 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.
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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, both Life Time Group Holdings, Inc. and Atour Lifestyle Holdings Limited Sponsored ADR are sporting a Zacks Rank of #2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is only part of the picture 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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
LTH currently has a forward P/E ratio of 17.26, while ATAT has a forward P/E of 23.38. We also note that LTH has a PEG ratio of 0.70. 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. ATAT currently has a PEG ratio of 1.02.
Another notable valuation metric for LTH is its P/B ratio of 1.91. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, ATAT has a P/B of 11.17.
These metrics, and several others, help LTH earn a Value grade of A, while ATAT has been given a Value grade of C.
Both LTH and ATAT are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that LTH 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.
