Investors interested in stocks from the Gaming sector have probably already heard of Boyd Gaming (BYD) and Take-Two Interactive (TTWO). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Right now, Boyd Gaming is sporting a Zacks Rank of #2 (Buy), while Take-Two Interactive has a Zacks Rank of #3 (Hold). 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 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 12.45, while TTWO has a forward P/E of 91.08. We also note that BYD has a PEG ratio of 2.43. 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. TTWO currently has a PEG ratio of 2.66.
Another notable valuation metric for BYD is its P/B ratio of 4.97. 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, TTWO has a P/B of 13.66.
These metrics, and several others, help BYD earn a Value grade of A, while TTWO has been given a Value grade of F.
BYD stands above TTWO thanks to its solid earnings outlook, and based on these valuation figures, we also feel that BYD is the superior value option right now.
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Boyd Gaming Corporation (BYD): Free Stock Analysis Report Take-Two Interactive Software, Inc. (TTWO): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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