Investors interested in Internet - Services stocks are likely familiar with JOYY (YY) and Shopify (SHOP). 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.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, JOYY is sporting a Zacks Rank of #2 (Buy), while Shopify has a Zacks Rank of #5 (Strong Sell). This means that YY'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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
YY currently has a forward P/E ratio of 12.52, while SHOP has a forward P/E of 1,205.38. We also note that YY has a PEG ratio of 2.51. 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. SHOP currently has a PEG ratio of 48.22.
Another notable valuation metric for YY is its P/B ratio of 0.86. 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, SHOP has a P/B of 18.78.
Based on these metrics and many more, YY holds a Value grade of A, while SHOP has a Value grade of F.
YY stands above SHOP thanks to its solid earnings outlook, and based on these valuation figures, we also feel that YY is the superior value option right now.
YY Inc. (YY): Free Stock Analysis Report
Shopify Inc. (SHOP): Free Stock Analysis Report
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