Investors interested in Gaming stocks are likely familiar with Eldorado Resorts (ERI - Free Report) and Churchill Downs (CHDN - 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.
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.
Both Eldorado Resorts and Churchill Downs have a Zacks Rank of # 2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is just one factor that value investors are interested in.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
ERI currently has a forward P/E ratio of 12.23, while CHDN has a forward P/E of 18.20. We also note that ERI has a PEG ratio of 0.61. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. CHDN currently has a PEG ratio of 0.91.
Another notable valuation metric for ERI is its P/B ratio of 3.05. 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, CHDN has a P/B of 6.58.
These are just a few of the metrics contributing to ERI's Value grade of B and CHDN's Value grade of C.
Both ERI and CHDN are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ERI is the superior value option right now.