Investors looking for stocks in the Gaming sector might want to consider either MGM Resorts (MGM) or Red Rock Resorts (RRR). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
MGM Resorts has a Zacks Rank of #2 (Buy), while Red Rock Resorts has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that MGM likely has seen a stronger improvement to its earnings outlook than RRR has recently. 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.
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.
MGM currently has a forward P/E ratio of 14.86, while RRR has a forward P/E of 28.27. We also note that MGM has a PEG ratio of 0.95. 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 2.81.
Another notable valuation metric for MGM is its P/B ratio of 3.20. 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, RRR has a P/B of 23.38.
These metrics, and several others, help MGM earn a Value grade of A, while RRR has been given a Value grade of C.
MGM stands above RRR thanks to its solid earnings outlook, and based on these valuation figures, we also feel that MGM is the superior value option right now.
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Red Rock Resorts, Inc. (RRR) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
