Investors interested in stocks from the Gaming sector have probably already heard of Light & Wonder (LNW) and Take-Two Interactive (TTWO). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Light & Wonder and Take-Two Interactive are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that LNW has an improving earnings outlook. 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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
LNW currently has a forward P/E ratio of 16.49, while TTWO has a forward P/E of 82.81. We also note that LNW has a PEG ratio of 0.59. 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. TTWO currently has a PEG ratio of 2.40.
Another notable valuation metric for LNW is its P/B ratio of 12.44. 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, TTWO has a P/B of 18.82.
These metrics, and several others, help LNW earn a Value grade of B, while TTWO has been given a Value grade of F.
LNW stands above TTWO thanks to its solid earnings outlook, and based on these valuation figures, we also feel that LNW is the superior value option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Light & Wonder, Inc. (LNW): Free Stock Analysis Report Take-Two Interactive Software, Inc. (TTWO): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
