Investors interested in stocks from the Gaming sector have probably already heard of Boyd Gaming (BYD) and Red Rock Resorts (RRR). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Boyd Gaming and Red Rock Resorts 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 BYD has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.
BYD currently has a forward P/E ratio of 12.00, while RRR has a forward P/E of 33.45. We also note that BYD has a PEG ratio of 2.34. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. RRR currently has a PEG ratio of 2.38.
Another notable valuation metric for BYD is its P/B ratio of 4.75. 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 20.96.
These are just a few of the metrics contributing to BYD's Value grade of A and RRR's 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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