Investors interested in Hotels and Motels stocks are likely familiar with Hilton Grand Vacations (HGV) and Choice Hotels (CHH). 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.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Hilton Grand Vacations and Choice Hotels are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that HGV 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 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.
HGV currently has a forward P/E ratio of 9.77, while CHH has a forward P/E of 14.93. We also note that HGV has a PEG ratio of 0.44. 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. CHH currently has a PEG ratio of 1.96.
Another notable valuation metric for HGV is its P/B ratio of 2.95. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, CHH has a P/B of 35.28.
These are just a few of the metrics contributing to HGV's Value grade of B and CHH's Value grade of C.
HGV sticks out from CHH in both our Zacks Rank and Style Scores models, so value investors will likely feel that HGV is the better option right now.
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Hilton Grand Vacations Inc. (HGV): Free Stock Analysis Report
Choice Hotels International, Inc. (CHH): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).