WMG vs. LYV: Which Stock Is the Better Value Option?

Investors interested in Film and Television Production and Distribution stocks are likely familiar with Warner Music Group Corp. (WMG) and Live Nation (LYV). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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.

Warner Music Group Corp. has a Zacks Rank of #2 (Buy), while Live Nation has a Zacks Rank of #5 (Strong Sell) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that WMG is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.

WMG currently has a forward P/E ratio of 19.27, while LYV has a forward P/E of 70.46. We also note that WMG has a PEG ratio of 0.71. 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. LYV currently has a PEG ratio of 9.72.

Another notable valuation metric for WMG is its P/B ratio of 20.61. 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, LYV has a P/B of 30.73.

These are just a few of the metrics contributing to WMG's Value grade of B and LYV's Value grade of D.

WMG stands above LYV thanks to its solid earnings outlook, and based on these valuation figures, we also feel that WMG is the superior value option right now.

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

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