MGM vs. RRR: Which Stock Is the Better Value Option?
Investors interested in stocks from the Gaming sector have probably already heard of MGM Resorts (MGM) and Red Rock Resorts (RRR). 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, MGM Resorts has a Zacks Rank of #2 (Buy), while Red Rock Resorts 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 MGM is likely seeing its earnings outlook improve to a greater extent. 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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
MGM currently has a forward P/E ratio of 17.08, while RRR has a forward P/E of 29.85. We also note that MGM has a PEG ratio of 1.43. 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. RRR currently has a PEG ratio of 3.87.
Another notable valuation metric for MGM is its P/B ratio of 3.36. 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, RRR has a P/B of 24.38.
Based on these metrics and many more, MGM holds a Value grade of A, while RRR has a Value grade of C.
MGM has seen stronger estimate revision activity and sports more attractive valuation metrics than RRR, so it seems like value investors will conclude that MGM is the superior option right now.
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MGM Resorts International (MGM) : Free Stock Analysis Report
Red Rock Resorts, Inc. (RRR) : Free Stock Analysis Report
