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STAY vs. OLCLY: Which Stock Is the Better Value Option?

Zacks Equity Research
Updated
Some investors are rotating out of earlier high flying technology stocks into cheap emerging markets.

Investors with an interest in Hotels and Motels stocks have likely encountered both Extended Stay America (STAY) and ORIENTAL LAND (OLCLY). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Extended Stay America and ORIENTAL LAND are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that STAY's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.

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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.

STAY currently has a forward P/E ratio of 19.30, while OLCLY has a forward P/E of 37.94. We also note that STAY has a PEG ratio of 2.56. 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. OLCLY currently has a PEG ratio of 3.16.

Another notable valuation metric for STAY is its P/B ratio of 3.24. 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, OLCLY has a P/B of 5.88.

Based on these metrics and many more, STAY holds a Value grade of B, while OLCLY has a Value grade of F.

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


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Extended Stay America, Inc. (STAY) : Free Stock Analysis Report
 
ORIENTAL LAND (OLCLY) : Free Stock Analysis Report
 
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