Investors with an interest in Leisure and Recreation Services stocks have likely encountered both Royal Caribbean (RCL – Free Report) and Airbnb, Inc. (ABNB – Free Report) . But which of these two stocks is more attractive to value investors? We’ll need to take a closer look to find out.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Royal Caribbean has a Zacks Rank of #2 (Buy), while Airbnb, Inc. has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that RCL is likely seeing its earnings outlook improve to a greater extent. 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.
RCL currently has a forward P/E ratio of 20.63, while ABNB has a forward P/E of 33.81. We also note that RCL has a PEG ratio of 0.63. 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. ABNB currently has a PEG ratio of 1.88.
Another notable valuation metric for RCL is its P/B ratio of 8.94. 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, ABNB has a P/B of 10.15.
These are just a few of the metrics contributing to RCL’s Value grade of B and ABNB’s Value grade of D.
RCL stands above ABNB thanks to its solid earnings outlook, and based on these valuation figures, we also feel that RCL is the superior value option right now.
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