Back to top

Image: Bigstock

IQ or IMAX: Which Is the Better Value Stock Right Now?

Read MoreHide Full Article

Investors interested in Film and Television Production and Distribution stocks are likely familiar with iQIYI, Inc. Sponsored ADR (IQ - Free Report) and Imax (IMAX - Free Report) . 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 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.

iQIYI, Inc. Sponsored ADR has a Zacks Rank of #2 (Buy), while Imax has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that IQ has an improving earnings outlook. But this is just one factor that value investors are interested in.

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.

IQ currently has a forward P/E ratio of 8.70, while IMAX has a forward P/E of 18.21. We also note that IQ has a PEG ratio of 0.24. 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. IMAX currently has a PEG ratio of 0.91.

Another notable valuation metric for IQ is its P/B ratio of 2.13. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, IMAX has a P/B of 2.58.

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

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

See More Zacks Research for These Tickers

Normally $25 each - click below to receive one report FREE:

IMAX Corporation (IMAX) - free report >>

iQIYI, Inc. Sponsored ADR (IQ) - free report >>

Published in