Investors with an interest in Gaming stocks have likely encountered both Boyd Gaming (BYD) and 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Boyd Gaming has a Zacks Rank of #2 (Buy), while Red Rock Resorts has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that BYD is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.
BYD currently has a forward P/E ratio of 11.29, while RRR has a forward P/E of 25.30. We also note that BYD has a PEG ratio of 1.06. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. RRR currently has a PEG ratio of 7.83.
Another notable valuation metric for BYD is its P/B ratio of 4.62. 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 603.48.
These are just a few of the metrics contributing to BYD's Value grade of A and RRR's Value grade of C.
BYD sticks out from RRR in both our Zacks Rank and Style Scores models, so value investors will likely feel that BYD is the better option right now.
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