Investors interested in Leisure and Recreation Services stocks are likely familiar with Carnival (CCL) and Manchester United (MANU). 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Carnival and Manchester United are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that CCL's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.
CCL currently has a forward P/E ratio of 9.60, while MANU has a forward P/E of 619. We also note that CCL has a PEG ratio of 1.11. 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. MANU currently has a PEG ratio of 28.29.
Another notable valuation metric for CCL is its P/B ratio of 0.91. 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, MANU has a P/B of 1.47.
These are just a few of the metrics contributing to CCL's Value grade of A and MANU's Value grade of D.
CCL sticks out from MANU in both our Zacks Rank and Style Scores models, so value investors will likely feel that CCL is the better option right now.
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Carnival Corporation (CCL) : Free Stock Analysis Report
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