Investors looking for stocks in the Transportation - Services sector might want to consider either ZTO Express (Cayman) Inc. (ZTO) or C.H. Robinson Worldwide (CHRW). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
ZTO Express (Cayman) Inc. and C.H. Robinson Worldwide are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that ZTO's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture 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.
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.
ZTO currently has a forward P/E ratio of 10.76, while CHRW has a forward P/E of 29.44. We also note that ZTO has a PEG ratio of 0.80. 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. CHRW currently has a PEG ratio of 1.55.
Another notable valuation metric for ZTO is its P/B ratio of 1.36. 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, CHRW has a P/B of 12.4.
Based on these metrics and many more, ZTO holds a Value grade of A, while CHRW has a Value grade of D.
ZTO 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 ZTO is likely the superior value option right now.
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ZTO Express (Cayman) Inc. (ZTO): Free Stock Analysis Report
C.H. Robinson Worldwide, Inc. (CHRW): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).