OSTK vs. AMZN: Which Stock Is the Better Value Option?
Investors interested in stocks from the Internet - Commerce sector have probably already heard of Overstock.com (OSTK) and Amazon (AMZN). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Overstock.com is sporting a Zacks Rank of #2 (Buy), while Amazon has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that OSTK 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 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.
OSTK currently has a forward P/E ratio of 34.71, while AMZN has a forward P/E of 66.06. We also note that OSTK has a PEG ratio of 1.74. 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. AMZN currently has a PEG ratio of 2.51.
Another notable valuation metric for OSTK is its P/B ratio of 5.10. 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, AMZN has a P/B of 15.20.
These are just a few of the metrics contributing to OSTK's Value grade of B and AMZN's Value grade of C.
OSTK is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that OSTK is likely the superior value option right now.
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Overstock.com, Inc. (OSTK) : Free Stock Analysis Report
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