Investors interested in Film and Television Production and Distribution stocks are likely familiar with Cinemark Holdings (CNK) and Live Nation (LYV). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Cinemark Holdings is sporting a Zacks Rank of #2 (Buy), while Live Nation has a Zacks Rank of #4 (Sell). This means that CNK'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.
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.
CNK currently has a forward P/E ratio of 18.98, while LYV has a forward P/E of 131.82. We also note that CNK has a PEG ratio of 1.90. 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. LYV currently has a PEG ratio of 14.78.
Another notable valuation metric for CNK is its P/B ratio of 6.7. 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, LYV has a P/B of 38.15.
Based on these metrics and many more, CNK holds a Value grade of A, while LYV has a Value grade of C.
CNK is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that CNK is likely the superior value option right now.
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Live Nation Entertainment, Inc. (LYV) : 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.
