STMP or AMZN: Which Is the Better Value Stock Right Now?
Investors interested in Internet - Commerce stocks are likely familiar with Stamps.com (STMP) and Amazon (AMZN). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.
Right now, Stamps.com is sporting a Zacks Rank of #2 (Buy), while Amazon has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that STMP likely has seen a stronger improvement to its earnings outlook than AMZN has recently. However, value investors will care about much more than just this.
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 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.
STMP currently has a forward P/E ratio of 28.84, while AMZN has a forward P/E of 78.55. We also note that STMP has a PEG ratio of 1.92. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. AMZN currently has a PEG ratio of 2.91.
Another notable valuation metric for STMP is its P/B ratio of 2.63. 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, AMZN has a P/B of 17.41.
Based on these metrics and many more, STMP holds a Value grade of B, while AMZN has a Value grade of D.
STMP sticks out from AMZN in both our Zacks Rank and Style Scores models, so value investors will likely feel that STMP is the better option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Zacks Investment Research
