Investors with an interest in Leisure and Recreation Services stocks have likely encountered both Life Time Group Holdings, Inc. (LTH) 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, Life Time Group Holdings, Inc. is sporting a Zacks Rank of #2 (Buy), while Vail Resorts has a Zacks Rank of #4 (Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that LTH has an improving earnings outlook. But this is just one factor that value investors are interested in.
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.
LTH currently has a forward P/E ratio of 24.47, while MTN has a forward P/E of 32.61. We also note that LTH has a PEG ratio of 1.49. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company’s expected earnings growth rate. MTN currently has a PEG ratio of 13.20.
Another notable valuation metric for LTH is its P/B ratio of 2.81. 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 5.47.
Based on these metrics and many more, LTH holds a Value grade of B, while MTN has a Value grade of C.
LTH sticks out from MTN in both our Zacks Rank and Style Scores models, so value investors will likely feel that LTH is the better option right now.
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This article originally published on Zacks Investment Research (zacks.com).
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