Investors looking for stocks in the Leisure and Recreation Services sector might want to consider either Cinemark Holdings (CNK - Free Report) or The Madison Square Garden Company (MSG - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Cinemark Holdings has a Zacks Rank of #2 (Buy), while The Madison Square Garden Company has a Zacks Rank of #3 (Hold). This means that CNK's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst 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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
CNK currently has a forward P/E ratio of 16.64, while MSG has a forward P/E of 384.64. We also note that CNK has a PEG ratio of 1.11. 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. MSG currently has a PEG ratio of 14.97.
Another notable valuation metric for CNK is its P/B ratio of 2.86. 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, MSG has a P/B of 2.92.
Based on these metrics and many more, CNK holds a Value grade of A, while MSG has a Value grade of F.
CNK stands above MSG thanks to its solid earnings outlook, and based on these valuation figures, we also feel that CNK is the superior value option right now.