Investors looking for stocks in the Leisure and Recreation Services sector might want to consider either Royal Caribbean (RCL) or Airbnb, Inc. (ABNB). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Royal Caribbean is sporting a Zacks Rank of #2 (Buy), while Airbnb, Inc. has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that RCL likely has seen a stronger improvement to its earnings outlook than ABNB has recently. But this is just one piece of the puzzle for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
RCL currently has a forward P/E ratio of 14.45, while ABNB has a forward P/E of 29.94. We also note that RCL has a PEG ratio of 0.73. 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. ABNB currently has a PEG ratio of 2.62.
Another notable valuation metric for RCL is its P/B ratio of 7.49. 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, ABNB has a P/B of 9.77.
Based on these metrics and many more, RCL holds a Value grade of B, while ABNB has a 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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Royal Caribbean Cruises Ltd. (RCL) : Free Stock Analysis Report
Airbnb, Inc. (ABNB) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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