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CHWY or MELI: 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 Chewy (CHWY - Free Report) and MercadoLibre (MELI - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Currently, Chewy has a Zacks Rank of #2 (Buy), while MercadoLibre has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that CHWY likely has seen a stronger improvement to its earnings outlook than MELI has recently. However, value investors will care about much more than just this.

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 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.

CHWY currently has a forward P/E ratio of 26.71, while MELI has a forward P/E of 54.53. We also note that CHWY has a PEG ratio of 0.86. 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. MELI currently has a PEG ratio of 1.25.

Another notable valuation metric for CHWY is its P/B ratio of 26.17. The 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. By comparison, MELI has a P/B of 28.40.

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

CHWY sticks out from MELI in both our Zacks Rank and Style Scores models, so value investors will likely feel that CHWY is the better option right now.


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