JD or MELI: Which Is the Better Value Stock Right Now?
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Investors interested in stocks from the Internet - Commerce sector have probably already heard of JD.com, Inc. (JD) and MercadoLibre (MELI). 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
JD.com, Inc. and MercadoLibre are both sporting a Zacks Rank of # 2 (Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is just one factor that value investors are interested in.
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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
JD currently has a forward P/E ratio of 10.15, while MELI has a forward P/E of 53.60. We also note that JD has a PEG ratio of 0.42. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. MELI currently has a PEG ratio of 1.23.
Another notable valuation metric for JD is its P/B ratio of 1.60. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, MELI has a P/B of 28.02.
Based on these metrics and many more, JD holds a Value grade of A, while MELI has a Value grade of C.
Both JD and MELI are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that JD is the superior value option right now.
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JD.com, Inc. (JD) : Free Stock Analysis Report
MercadoLibre, Inc. (MELI) : Free Stock Analysis Report