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Investors interested in stocks from the Leisure and Recreation Services sector have probably already heard of Marriott Vacations Worldwide (VAC) and Vail Resorts (MTN). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
Right now, Marriott Vacations Worldwide is sporting a Zacks Rank of #2 (Buy), while Vail Resorts has a Zacks Rank of #5 (Strong Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that VAC has an improving earnings outlook. However, value investors will care about much more than just this.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
VAC currently has a forward P/E ratio of 15.19, while MTN has a forward P/E of 25.09. We also note that VAC has a PEG ratio of 0.86. 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 1.75.
Another notable valuation metric for VAC is its P/B ratio of 1.36. 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, MTN has a P/B of 6.58.
These are just a few of the metrics contributing to VAC's Value grade of A and MTN's Value grade of D.
VAC has seen stronger estimate revision activity and sports more attractive valuation metrics than MTN, so it seems like value investors will conclude that VAC is the superior option right now.
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Marriott Vacations Worldwide Corporation (VAC) : Free Stock Analysis Report