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DTC or AMZN: Which Is the Better Value Stock Right Now?

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Investors interested in stocks from the Internet - Commerce sector have probably already heard of Solo Brands, Inc. (DTC - Free Report) and Amazon (AMZN - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, Solo Brands, Inc. has a Zacks Rank of #2 (Buy), while Amazon has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that DTC has an improving earnings outlook. But this is only part of the picture for value investors.

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.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

DTC currently has a forward P/E ratio of 8.84, while AMZN has a forward P/E of 58.43. We also note that DTC has a PEG ratio of 0.26. 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. AMZN currently has a PEG ratio of 2.35.

Another notable valuation metric for DTC is its P/B ratio of 2.16. 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, AMZN has a P/B of 10.71.

These metrics, and several others, help DTC earn a Value grade of B, while AMZN has been given a Value grade of C.

DTC has seen stronger estimate revision activity and sports more attractive valuation metrics than AMZN, so it seems like value investors will conclude that DTC is the superior option right now.


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