NCLH or MTN: Which Is the Better Value Stock Right Now?

Investors interested in stocks from the Leisure and Recreation Services sector have probably already heard of Norwegian Cruise Line (NCLH) and Vail Resorts (MTN). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, Norwegian Cruise Line has a Zacks Rank of #1 (Strong Buy), while Vail Resorts has a Zacks Rank of #5 (Strong Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that NCLH is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

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.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

NCLH currently has a forward P/E ratio of 11.92, while MTN has a forward P/E of 22.52. We also note that NCLH has a PEG ratio of 0.97. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. MTN currently has a PEG ratio of 2.54.

Another notable valuation metric for NCLH is its P/B ratio of 6.99. 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, MTN has a P/B of 7.66.

Based on these metrics and many more, NCLH holds a Value grade of A, while MTN has a Value grade of C.

NCLH has seen stronger estimate revision activity and sports more attractive valuation metrics than MTN, so it seems like value investors will conclude that NCLH is the superior option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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