MCS vs. MSG: Which Stock Should Value Investors Buy Now?
Investors interested in Leisure and Recreation Services stocks are likely familiar with Marcus (MCS) and The Madison Square Garden Company (MSG). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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.
Currently, Marcus has a Zacks Rank of #1 (Strong Buy), while The Madison Square Garden Company has a Zacks Rank of #2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that MCS is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
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 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.
MCS currently has a forward P/E ratio of 21.58, while MSG has a forward P/E of 440.14. We also note that MCS has a PEG ratio of 1.44. 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. MSG currently has a PEG ratio of 17.13.
Another notable valuation metric for MCS is its P/B ratio of 2.35. 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, MSG has a P/B of 2.54.
Based on these metrics and many more, MCS holds a Value grade of B, while MSG has a Value grade of F.
MCS sticks out from MSG in both our Zacks Rank and Style Scores models, so value investors will likely feel that MCS is the better option right now.