Investors interested in Gaming stocks are likely familiar with Boyd Gaming (BYD) and Red Rock Resorts (RRR). 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.
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 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.
Right now, Boyd Gaming is sporting a Zacks Rank of #1 (Strong Buy), while Red Rock Resorts has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that BYD has an improving earnings outlook. But this is just one factor that value investors are interested in.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.
BYD currently has a forward P/E ratio of 12.34, while RRR has a forward P/E of 35.50. We also note that BYD has a PEG ratio of 2.88. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. RRR currently has a PEG ratio of 3.64.
Another notable valuation metric for BYD is its P/B ratio of 4.95. 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, RRR has a P/B of 17.6.
These metrics, and several others, help BYD earn a Value grade of A, while RRR has been given a Value grade of C.
BYD has seen stronger estimate revision activity and sports more attractive valuation metrics than RRR, so it seems like value investors will conclude that BYD is the superior option right now.
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Red Rock Resorts, Inc. (RRR) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
