Investors looking for stocks in the Gaming sector might want to consider either Penn National Gaming (PENN - Free Report) or Monarch Casino (MCRI - 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.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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, Penn National Gaming is sporting a Zacks Rank of #2 (Buy), while Monarch Casino has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that PENN is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
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.
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.
PENN currently has a forward P/E ratio of 12.85, while MCRI has a forward P/E of 22.85. We also note that PENN has a PEG ratio of 1.29. 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. MCRI currently has a PEG ratio of 1.83.
Another notable valuation metric for PENN is its P/B ratio of 1.19. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, MCRI has a P/B of 2.48.
These metrics, and several others, help PENN earn a Value grade of A, while MCRI has been given a Value grade of D.
PENN stands above MCRI thanks to its solid earnings outlook, and based on these valuation figures, we also feel that PENN is the superior value option right now.