Investors interested in stocks from the Leisure and Recreation Services sector have probably already heard of Life Time Group Holdings, Inc. (LTH) and Vail Resorts (MTN). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 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.
Currently, Life Time Group Holdings, Inc. has a Zacks Rank of #2 (Buy), while Vail Resorts has a Zacks Rank of #4 (Sell). This means that LTH's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
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.
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.
LTH currently has a forward P/E ratio of 25.28, while MTN has a forward P/E of 34.27. We also note that LTH has a PEG ratio of 1.54. 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 13.88.
Another notable valuation metric for LTH is its P/B ratio of 2.9. 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 5.75.
These metrics, and several others, help LTH earn a Value grade of B, while MTN has been given a Value grade of C.
LTH 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 LTH is likely the superior value option right now.
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Life Time Group Holdings, Inc. (LTH): Free Stock Analysis Report
Vail Resorts, Inc. (MTN): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).