Investors interested in Film and Television Production and Distribution stocks are likely familiar with Lions Gate Entertainment (LGF.A) and Imax (IMAX). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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.
Right now, Lions Gate Entertainment is sporting a Zacks Rank of #2 (Buy), while Imax has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that LGF.A is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
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.
LGF.A currently has a forward P/E ratio of 11.21, while IMAX has a forward P/E of 19.35. We also note that LGF.A has a PEG ratio of 0.75. 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. IMAX currently has a PEG ratio of 1.11.
Another notable valuation metric for LGF.A is its P/B ratio of 0.85. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, IMAX has a P/B of 2.24.
Based on these metrics and many more, LGF.A holds a Value grade of A, while IMAX has a Value grade of C.
LGF.A stands above IMAX thanks to its solid earnings outlook, and based on these valuation figures, we also feel that LGF.A is the superior value option right now.
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