Yahoo Finance MGM or RRR: Which Is the Better Value Stock Right Now?
Investors looking for stocks in the Gaming sector might want to consider either MGM Resorts (MGM) or Red Rock Resorts (RRR). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
MGM Resorts and Red Rock Resorts are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that MGM likely has seen a stronger improvement to its earnings outlook than RRR has recently. But this is only part of the picture for value investors.
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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
MGM currently has a forward P/E ratio of 18.43, while RRR has a forward P/E of 31.46. We also note that MGM has a PEG ratio of 1.54. 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. RRR currently has a PEG ratio of 4.08.
Another notable valuation metric for MGM is its P/B ratio of 3.67. 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, RRR has a P/B of 25.69.
Based on these metrics and many more, MGM holds a Value grade of A, while RRR 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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MGM Resorts International (MGM) : Free Stock Analysis Report
Red Rock Resorts, Inc. (RRR) : Free Stock Analysis Report
