TH 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 Target Hospitality (TH) or Vail Resorts (MTN). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Target Hospitality has a Zacks Rank of #1 (Strong Buy), while Vail Resorts has a Zacks Rank of #3 (Hold). This means that TH'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.
TH currently has a forward P/E ratio of 9.77, while MTN has a forward P/E of 23.11. We also note that TH has a PEG ratio of 0.65. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. MTN currently has a PEG ratio of 1.66.
Another notable valuation metric for TH is its P/B ratio of 5.48. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, MTN has a P/B of 6.02.
These metrics, and several others, help TH earn a Value grade of B, while MTN has been given a Value grade of C.
TH has seen stronger estimate revision activity and sports more attractive valuation metrics than MTN, so it seems like value investors will conclude that TH is the superior option right now.
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Target Hospitality Corp. (TH) : Free Stock Analysis Report
Vail Resorts, Inc. (MTN) : Free Stock Analysis Report
