RCL vs. MTN: Which Stock Is the Better Value Option?
Investors looking for stocks in the Leisure and Recreation Services sector might want to consider either Royal Caribbean (RCL) or Vail Resorts (MTN). 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.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Royal Caribbean has a Zacks Rank of #1 (Strong Buy), while Vail Resorts has a Zacks Rank of #3 (Hold). This means that RCL's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.
RCL currently has a forward P/E ratio of 12.96, while MTN has a forward P/E of 25.57. We also note that RCL has a PEG ratio of 0.47. 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. MTN currently has a PEG ratio of 2.02.
Another notable valuation metric for RCL is its P/B ratio of 6.79. 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, MTN has a P/B of 7.47.
These are just a few of the metrics contributing to RCL's Value grade of B and MTN's Value grade of C.
RCL has seen stronger estimate revision activity and sports more attractive valuation metrics than MTN, so it seems like value investors will conclude that RCL is the superior option right now.
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Royal Caribbean Cruises Ltd. (RCL) : Free Stock Analysis Report
Vail Resorts, Inc. (MTN) : Free Stock Analysis Report
