Investors interested in Gaming stocks are likely familiar with 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.
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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify 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 means that BYD's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.
BYD currently has a forward P/E ratio of 12.40, while RRR has a forward P/E of 34.84. We also note that BYD has a PEG ratio of 2.90. 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 5.75.
Another notable valuation metric for BYD is its P/B ratio of 4.91. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, RRR has a P/B of 15.76.
These metrics, and several others, help BYD earn a Value grade of A, while RRR has been given a Value grade of C.
BYD 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 BYD is likely the superior value option right now.
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Boyd Gaming Corporation (BYD): Free Stock Analysis Report Red Rock Resorts, Inc. (RRR): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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