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Investors looking for stocks in the Internet - Commerce sector might want to consider either Qurate Retail (QRTEA) or Amazon (AMZN). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Qurate Retail and Amazon are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that QRTEA has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
QRTEA currently has a forward P/E ratio of 2.11, while AMZN has a forward P/E of 64.64. We also note that QRTEA has a PEG ratio of 0.13. 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. AMZN currently has a PEG ratio of 2.39.
Another notable valuation metric for QRTEA is its P/B ratio of 0.38. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, AMZN has a P/B of 14.32.
These metrics, and several others, help QRTEA earn a Value grade of A, while AMZN has been given a Value grade of D.
QRTEA stands above AMZN thanks to its solid earnings outlook, and based on these valuation figures, we also feel that QRTEA is the superior value option right now.
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