WUBA vs. RNG: Which Stock Is the Better Value Option?
Investors with an interest in Internet - Software and Services stocks have likely encountered both 58.com Inc. (WUBA) and RingCentral (RNG). 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, 58.com Inc. has a Zacks Rank of #2 (Buy), while RingCentral has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that WUBA likely has seen a stronger improvement to its earnings outlook than RNG 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.
WUBA currently has a forward P/E ratio of 17.06, while RNG has a forward P/E of 273.44. We also note that WUBA has a PEG ratio of 0.82. 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. RNG currently has a PEG ratio of 14.51.
Another notable valuation metric for WUBA is its P/B ratio of 1.76. 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, RNG has a P/B of 44.65.
Based on these metrics and many more, WUBA holds a Value grade of A, while RNG has a Value grade of F.
WUBA stands above RNG thanks to its solid earnings outlook, and based on these valuation figures, we also feel that WUBA is the superior value option right now.
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