Investors with an interest in Film and Television Production and Distribution stocks have likely encountered both 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.
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 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.
Lions Gate Entertainment and Imax are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. 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. But this is only part of the picture 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.
LGF.A currently has a forward P/E ratio of 11.79, while IMAX has a forward P/E of 18.89. We also note that LGF.A has a PEG ratio of 0.79. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. IMAX currently has a PEG ratio of 1.08.
Another notable valuation metric for LGF.A is its P/B ratio of 0.94. 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, IMAX has a P/B of 2.20.
These metrics, and several others, help LGF.A earn a Value grade of A, while IMAX has been given a Value grade of D.
LGF.A sticks out from IMAX in both our Zacks Rank and Style Scores models, so value investors will likely feel that LGF.A is the better option right now.
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