Investors looking for stocks in the Internet - Commerce sector might want to consider either eBay (EBAY) or Amazon (AMZN). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
eBay and Amazon are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that EBAY's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
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.
EBAY currently has a forward P/E ratio of 14.92, while AMZN has a forward P/E of 63.88. We also note that EBAY has a PEG ratio of 0.97. 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. AMZN currently has a PEG ratio of 2.37.
Another notable valuation metric for EBAY is its P/B ratio of 11.49. 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, AMZN has a P/B of 17.03.
Based on these metrics and many more, EBAY holds a Value grade of B, while AMZN has a Value grade of D.
EBAY has seen stronger estimate revision activity and sports more attractive valuation metrics than AMZN, so it seems like value investors will conclude that EBAY is the superior option right now.
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eBay Inc. (NASDAQ:EBAY): Free Stock Analysis Report
Amazon.com, Inc. (NASDAQ:AMZN): Free Stock Analysis Report
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