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RCL vs. ABNB: Which Stock Is the Better Value Option?
Investors with an interest in Leisure and Recreation Services stocks have likely encountered both Royal Caribbean (RCL - Free Report) and Airbnb, Inc. (ABNB - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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.
Royal Caribbean has a Zacks Rank of #2 (Buy), while Airbnb, Inc. 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 RCL is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.
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.
RCL currently has a forward P/E ratio of 15.76, while ABNB has a forward P/E of 29.58. We also note that RCL has a PEG ratio of 0.48. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ABNB currently has a PEG ratio of 1.65.
Another notable valuation metric for RCL is its P/B ratio of 8.46. 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, ABNB has a P/B of 9.83.
Based on these metrics and many more, RCL holds a Value grade of B, while ABNB has a Value grade of D.
RCL stands above ABNB thanks to its solid earnings outlook, and based on these valuation figures, we also feel that RCL is the superior value option right now.