Back to top

Image: Bigstock

ECHO or ZTO: Which Is the Better Value Stock Right Now?

Read MoreHide Full Article

Investors interested in stocks from the Transportation - Services sector have probably already heard of Echo Global Logistics and ZTO Express Cayman Inc. (ZTO - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Right now, Echo Global Logistics is sporting a Zacks Rank of #2 (Buy), while ZTO Express Cayman Inc. has a Zacks Rank of #5 (Strong Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that ECHO has an improving earnings outlook. 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 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.

ECHO currently has a forward P/E ratio of 15.81, while ZTO has a forward P/E of 36.22. We also note that ECHO has a PEG ratio of 0.90. 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. ZTO currently has a PEG ratio of 2.86.

Another notable valuation metric for ECHO is its P/B ratio of 2.18. 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, ZTO has a P/B of 2.82.

Based on these metrics and many more, ECHO holds a Value grade of B, while ZTO has a Value grade of D.

ECHO stands above ZTO thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ECHO is the superior value option right now.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


ZTO Express (Cayman) Inc. (ZTO) - free report >>

Published in