While the tried and tested Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to create their own individual strategies. With this in mind, we constantly look for value, growth and momentum trends to discover great companies.
Of these, perhaps no stock market trend is more popular than value investing, a strategy that has proven successful in all sorts of market environments. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are undervalued by the market as a whole.
In addition to the Zacks Rank, investors looking for stocks with specific characteristics can use our Style Scores system. Of course, value investors will be most interested in the “value” category of the system. Stocks with “A” Value ratings and high Zacks ranks are among the best value stocks available at any given time.
Caesar’s Entertainment (CZR – free report) is a stock that many investors are watching right now. CZR currently holds a Zacks Rank of #2 (Buy) and a Value Grade of A.
Another valuation metric worth highlighting is CZR’s P/B ratio of 2.80. 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. CZR’s current P/B looks attractive compared to the industry average P/B of 3.96. CZR’s P/B has been 4.50 over the past year and 1.78 with a median of 2.92.
Value investors also love the K/S ratio, which is calculated by simply dividing a stock’s price by the company’s revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. CZR has a P/S ratio of 1.01. This compares to the industry average P/S of 1.24.
RCI Hospitality (rick – free report) could be another strong leisure and recreation services stock to add to your shortlist. RICK is a #2 (Buy) stock with a Value rating of A.
RCI Hospitality is currently trading at a forward P/E of 14.47, while its PEG ratio is 1.21. Both of the company’s metrics compare well to its industry average P/E of 40.89 and average PEG ratio of 2.46.
Over the past 12 months, RICK’s P/E ratio has been as high as 18.45, as low as 8.83, with a median of 12.08, and its PEG ratio has been as high as 1.54, as low as 0, 74, with a median of 1.01.
Additionally, RCI Hospitality holds a P/B ratio of 3.40 and the industry price to book ratio is 3.96. RICK’s P/B has been as high as 3.95, as low as 1.94, with a median of 2.73 over the last 12 months.
These numbers are just some of the metrics that value investors tend to watch, but they show that Caesars Entertainment and RCI Hospitality are likely undervalued right now. Given that and the strong earnings outlook, CZR and RICK feel like a value stock right now.