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MBUU vs. POOL: Which Stock Should Value Investors Buy Now?

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Investors with an interest in Leisure and Recreation Products stocks have likely encountered both Malibu Boats (MBUU - Free Report) and Pool Corp. (POOL - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. 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, both Malibu Boats and Pool Corp. are sporting a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is only part of the picture for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.

MBUU currently has a forward P/E ratio of 12.77, while POOL has a forward P/E of 25.54. We also note that MBUU has a PEG ratio of 0.85. 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. POOL currently has a PEG ratio of 1.09.

Another notable valuation metric for MBUU is its P/B ratio of 5.54. 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, POOL has a P/B of 16.92.

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

Both MBUU and POOL are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that MBUU is the superior value option right now.


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