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BIDU or SHOP: Which Is the Better Value Stock Right Now?

Investors interested in stocks from the Internet - Services sector have probably already heard of Baidu Inc. (BIDU) and Shopify (SHOP). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Baidu Inc. has a Zacks Rank of #1 (Strong Buy), while Shopify has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that BIDU likely has seen a stronger improvement to its earnings outlook than SHOP has recently. 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.

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The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

BIDU currently has a forward P/E ratio of 12.29, while SHOP has a forward P/E of 1,248.96. We also note that BIDU has a PEG ratio of 0.60. 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. SHOP currently has a PEG ratio of 93.91.

Another notable valuation metric for BIDU is its P/B ratio of 1.58. 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, SHOP has a P/B of 7.49.

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

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

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Baidu, Inc. (BIDU) : Free Stock Analysis Report

Shopify Inc. (SHOP) : Free Stock Analysis Report

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Zacks Investment Research