Investors interested in stocks from the Leisure and Recreation Services sector have probably already heard of SeaWorld (SEAS - Free Report) and Camping World (CWH - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
SeaWorld and Camping World are sporting Zacks Ranks of #1 (Strong Buy) and #5 (Strong Sell), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that SEAS is likely seeing its earnings outlook improve to a greater extent. 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 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.
SEAS currently has a forward P/E ratio of 18.69, while CWH has a forward P/E of 106. We also note that SEAS has a PEG ratio of 2.67. 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. CWH currently has a PEG ratio of 9.37.
Another notable valuation metric for SEAS is its P/B ratio of 19.23. 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, CWH has a P/B of 32.77.
These are just a few of the metrics contributing to SEAS's Value grade of B and CWH's Value grade of C.
SEAS is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that SEAS is likely the superior value option right now.