Investors looking for stocks in the Internet - Content sector might want to consider either Yelp (YELP) or RELX PLC (RELX). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Yelp has a Zacks Rank of #1 (Strong Buy), while RELX PLC has a Zacks Rank of #2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that YELP has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.
YELP currently has a forward P/E ratio of 20.56, while RELX has a forward P/E of 30.42. We also note that YELP has a PEG ratio of 0.80. 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. RELX currently has a PEG ratio of 2.97.
Another notable valuation metric for YELP is its P/B ratio of 3.11. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, RELX has a P/B of 21.07.
These metrics, and several others, help YELP earn a Value grade of A, while RELX has been given a Value grade of D.
YELP has seen stronger estimate revision activity and sports more attractive valuation metrics than RELX, so it seems like value investors will conclude that YELP is the superior option right now.
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RELX PLC (RELX) : Free Stock Analysis Report
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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.
