Which Stock Should Value Investors Buy Now?
Investors interested in stocks in the Transportation – Services sector have probably already heard of ZTO Express (Cayman) Inc. (ZTO) and CH Robinson Worldwide (CHRW). But which of these two stocks is more attractive to value investors? You’ll have to take a closer look to find out.
There are many 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 exhibiting positive estimate revision trends, and our Style Scores highlight stocks exhibiting specific traits.
Currently, ZTO Express (Cayman) Inc. and CH Robinson Worldwide hold a Zacks Rank #2 (Buy). This system emphasizes companies that have seen positive earnings estimate revisions, so investors should take comfort in knowing that these stocks have improved earnings prospects. But that’s just one piece of the puzzle for value investors.
Value investors are also interested in a number of proven valuation metrics that help determine when a company is undervalued at its current stock 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 value investors have used for years.
ZTO currently has a forward P/E ratio of 13.14, while CHRW has a forward P/E ratio of 28.11. We also note that ZTO has a PEG ratio of 1.21. This popular figure is similar to the widely used P/E ratio, but the PEG ratio also takes into account a company’s expected EPS growth rate. CHRW currently has a PEG ratio of 1.75.
Another notable valuation metric for ZTO is its P/B ratio of 1.52. P/B is a method of comparing a stock’s market value to its book value, which is defined as total assets minus total liabilities. For comparison, CHRW has a P/B of 10.63.
These are just a few of the metrics contributing to ZTO’s B Value rating and CHRW’s D Value rating.
ZTO and CHRW are impressive stocks with strong earnings prospects, but based on these valuation numbers, we think ZTO is the superior value option right now.
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