Investors with an interest in Leisure and Recreation Products stocks have likely encountered both MCBC Holdings (MCFT - Free Report) and Pool Corp. (POOL - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, MCBC Holdings is sporting a Zacks Rank of #1 (Strong Buy), while Pool Corp. has a Zacks Rank of #2 (Buy). This means that MCFT'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.
MCFT currently has a forward P/E ratio of 8.94, while POOL has a forward P/E of 28.37. We also note that MCFT has a PEG ratio of 0.60. 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. POOL currently has a PEG ratio of 1.21.
Another notable valuation metric for MCFT is its P/B ratio of 7.88. 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 17.27.
These are just a few of the metrics contributing to MCFT's Value grade of B and POOL's Value grade of C.
MCFT stands above POOL thanks to its solid earnings outlook, and based on these valuation figures, we also feel that MCFT is the superior value option right now.