Are investors currently underestimating Alibaba (BABA)?

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. However, we know that our readers all have their own perspectives. That's why we always look at the latest trends in value, growth and momentum to find good tips.

Given these trends, value investing is clearly one of the most popular ways to find strong stocks in any market. Value investors use a variety of methods, including tried-and-tested valuation metrics, to find these stocks.

In addition to the Zacks Rank, investors looking for stocks with specific traits can use our Style Scores system. Value investors will of course be particularly interested in the “Value” category of the system. Stocks with “A” grades for Value and high Zacks Ranks are some of the best value stocks available today.

One company to keep an eye on right now is Alibaba (BABA). BABA currently has a Zacks Rank of #2 (Buy) as well as a Value grade of A. The stock has a P/E ratio of 13.15 while its industry has an average P/E ratio of 25.35. Over the last 12 months, BABA's Forward P/E has been as high as 13.23 and as high as 7.73, with a median of 8.84.

Investors will also note that BABA has a PEG ratio of 0.53. This number is similar to the commonly used P/E ratio, although the PEG ratio also takes into account a company's expected earnings growth rate. BABA's PEG compares to its industry's average PEG of 1.09. Over the last 12 months, BABA's PEG has been as high as 0.53 and as low as 0.37, with a median of 0.39.

Investors should also be aware that BABA has a P/E ratio of 1.92. The P/E ratio is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. BABA's current P/E ratio looks attractive compared to its industry's average P/E ratio of 5.30. Over the last 12 months, BABA's P/E ratio has been as high as 1.93 and as high as 1.08, with a median of 1.27.

If you're looking for another solid internet commerce stock, take a look Match Group (MTCH). MTCH is a #2 (Buy) stock with a Value Score of A.

Match Group is currently trading at a forward earnings multiple of 16.42, with a PEG ratio of 0.67. In comparison, the industry's average P/E ratio is 25.35 and the average PEG ratio is 1.09.

MTCH's Forward P/E ratio was as high as 18.89 and as high as 12.59, with a median of 15.44. During the same period, the PEG ratio was as high as 0.68, as low as 0.42 and as low as a median of 0.54.

Additionally, Match Group has a P/E ratio of -74.53 while the industry's price-to-book ratio is 5.30. For MTCH, this valuation metric has ranged from -25.86 and -550.38 over the past year, with a median of -73.97.

The story continues

Value investors will likely look at more than just these metrics, but the data above shows that Alibaba and Match Group are likely undervalued right now. And when you take into account the good earnings prospects, BABA and MTCH stands out as one of the best value stocks on the market.

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Alibaba Group Holding Limited (BABA): Free stock analysis report

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