VNET or SPOT: Which Is the Better Value Stock Right Now?
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 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.
VNET Group and Spotify are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that VNET's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.
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.
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.
VNET currently has a forward P/E ratio of 71.59, while SPOT has a forward P/E of 83.78. We also note that VNET has a PEG ratio of 1.31. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. SPOT currently has a PEG ratio of 2.03.
Another notable valuation metric for VNET is its P/B ratio of 2.02. 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, SPOT has a P/B of 24.03.
These metrics, and several others, help VNET earn a Value grade of A, while SPOT has been given a Value grade of F.
VNET 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 VNET is likely the superior value option right now.
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VNET Group, Inc. - Unsponsored ADR (VNET) : Free Stock Analysis Report
Spotify Technology (SPOT) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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