Investors interested in stocks from the Gaming sector have probably already heard of Boyd Gaming (BYD - 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.
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 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, Boyd Gaming has a Zacks Rank of #2 (Buy), while Zynga has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that BYD likely has seen a stronger improvement to its earnings outlook than ZNGA has recently. But this is only part of the picture 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.
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.
BYD currently has a forward P/E ratio of 17.65, while ZNGA has a forward P/E of 24.95. We also note that BYD has a PEG ratio of 1.36. 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. ZNGA currently has a PEG ratio of 1.73.
Another notable valuation metric for BYD is its P/B ratio of 2.70. 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, ZNGA has a P/B of 3.06.
Based on these metrics and many more, BYD holds a Value grade of A, while ZNGA has a Value grade of F.
BYD stands above ZNGA thanks to its solid earnings outlook, and based on these valuation figures, we also feel that BYD is the superior value option right now.