ZTO vs. CHRW: Which Stock Is the Better Value Option?
Investors interested in stocks from the Transportation - Services sector have probably already heard of ZTO Express (Cayman) Inc. (ZTO) and C.H. Robinson Worldwide (CHRW). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, ZTO Express (Cayman) Inc. has a Zacks Rank of #2 (Buy), while C.H. Robinson Worldwide has a Zacks Rank of #3 (Hold). 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 also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.
ZTO currently has a forward P/E ratio of 13.20, while CHRW has a forward P/E of 28.24. 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 considers a company's expected EPS growth rate. CHRW currently has a PEG ratio of 1.71.
Another notable valuation metric for ZTO is its P/B ratio of 1.54. 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 11.85.
These are just a few of the metrics contributing to ZTO's Value grade of A and CHRW's Value grade of D.
ZTO has seen stronger estimate revision activity and sports more attractive valuation metrics than CHRW, so it seems like value investors will conclude that ZTO is the superior option right now.
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