ELY or POOL: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Leisure and Recreation Products sector have probably already heard of Callaway Golf (ELY) and Pool Corp. (POOL). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Callaway Golf and Pool Corp. are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ELY is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
ELY currently has a forward P/E ratio of 18.36, while POOL has a forward P/E of 32.74. We also note that ELY has a PEG ratio of 0.73. 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. POOL currently has a PEG ratio of 1.39.
Another notable valuation metric for ELY is its P/B ratio of 2.47. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, POOL has a P/B of 20.45.
These metrics, and several others, help ELY earn a Value grade of A, while POOL has been given a Value grade of D.
ELY sticks out from POOL in both our Zacks Rank and Style Scores models, so value investors will likely feel that ELY is the better option right now.
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