Back to top

Image: Bigstock

PENN vs. ZNGA: Which Stock Is the Better Value Option?

Read MoreHide Full Article

Investors with an interest in Gaming stocks have likely encountered both Penn National Gaming (PENN - Free Report) and Zynga (ZNGA - 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.

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.

Currently, Penn National Gaming has a Zacks Rank of #2 (Buy), while Zynga has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that PENN has an improving earnings outlook. But this is just one piece of the puzzle for value investors.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.

PENN currently has a forward P/E ratio of 12.21, while ZNGA has a forward P/E of 27.50. We also note that PENN has a PEG ratio of 1.22. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ZNGA 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 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, ZNGA has a P/B of 3.32.

These metrics, and several others, help PENN earn a Value grade of A, while ZNGA has been given a Value grade of F.

PENN is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that PENN is likely the superior value option right now.


In-Depth Zacks Research for the Tickers Above


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


Penn National Gaming, Inc. (PENN) - free report >>

Zynga Inc. (ZNGA) - free report >>

Published in