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MGM vs. LVS: Which Stock Is the Better Value Option?

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Investors interested in stocks from the Gaming sector have probably already heard of MGM Resorts (MGM - Free Report) and Las Vegas Sands (LVS - 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.

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.

MGM Resorts has a Zacks Rank of #2 (Buy), while Las Vegas Sands has a Zacks Rank of #3 (Hold) right now. This means that MGM'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 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.

MGM currently has a forward P/E ratio of 21.78, while LVS has a forward P/E of 23.11. We also note that MGM has a PEG ratio of 2.16. 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. LVS currently has a PEG ratio of 10.27.

Another notable valuation metric for MGM is its P/B ratio of 1.61. 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, LVS has a P/B of 8.19.

Based on these metrics and many more, MGM holds a Value grade of B, while LVS has a Value grade of C.

MGM 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 MGM is likely the superior value option right now.


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