IMAX vs. WMG: Which Stock Should Value Investors Buy Now?
Investors interested in stocks from the Film and Television Production and Distribution sector have probably already heard of Imax (IMAX) and Warner Music Group Corp. (WMG). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Imax has a Zacks Rank of #2 (Buy), while Warner Music Group Corp. has a Zacks Rank of #4 (Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that IMAX is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.
IMAX currently has a forward P/E ratio of 22.49, while WMG has a forward P/E of 36.51. We also note that IMAX has a PEG ratio of 1.12. 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. WMG currently has a PEG ratio of 4.02.
Another notable valuation metric for IMAX is its P/B ratio of 2.78. 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, WMG has a P/B of 51.13.
These metrics, and several others, help IMAX earn a Value grade of B, while WMG has been given a Value grade of C.
IMAX 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 IMAX is likely the superior value option right now.
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IMAX Corporation (IMAX) : Free Stock Analysis Report
Warner Music Group Corp. (WMG) : Free Stock Analysis Report
