ZTO vs. CHRW: Which Stock Is the Better Value Option?
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 companies is the best option for those looking for undervalued stocks? Let's 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
ZTO Express (Cayman) Inc. has a Zacks Rank of #2 (Buy), while C.H. Robinson Worldwide has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ZTO is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
ZTO currently has a forward P/E ratio of 11.93, while CHRW has a forward P/E of 29.20. We also note that ZTO has a PEG ratio of 1.10. 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. CHRW currently has a PEG ratio of 1.54.
Another notable valuation metric for ZTO is its P/B ratio of 1.4. 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 12.31.
Based on these metrics and many more, ZTO holds a Value grade of A, while CHRW has a 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.
The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon $AMZN and Google $GOOGL were to the internet era.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Join 500,000+ readers who start their day with Quartz.
By subscribing, you agree to our Terms of Service and Privacy Policy.
