Investors interested in Internet - Services stocks are likely familiar with Uber Technologies (UBER) and The Trade Desk (TTD). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
Right now, Uber Technologies is sporting a Zacks Rank of #2 (Buy), while The Trade Desk has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that UBER 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 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.
UBER currently has a forward P/E ratio of 32.35, while TTD has a forward P/E of 81.42. We also note that UBER has a PEG ratio of 0.76. 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. TTD currently has a PEG ratio of 3.21.
Another notable valuation metric for UBER is its P/B ratio of 8.26. 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, TTD has a P/B of 25.20.
Based on these metrics and many more, UBER holds a Value grade of B, while TTD has a Value grade of F.
UBER sticks out from TTD in both our Zacks Rank and Style Scores models, so value investors will likely feel that UBER is the better option right now.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
