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BYD vs. ERI: Which Stock Should Value Investors Buy Now?

Zacks

Investors interested in stocks from the Gaming sector have probably already heard of Boyd Gaming (BYD) and Eldorado Resorts (ERI). But which of these two stocks presents investors with the better value opportunity right now? Let’s take a closer look.

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, Boyd Gaming is sporting a Zacks Rank of #1 (Strong Buy), while Eldorado Resorts has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that BYD is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.

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.

BYD currently has a forward P/E ratio of 22.11, while ERI has a forward P/E of 30.97. We also note that BYD has a PEG ratio of 1.47. 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. ERI currently has a PEG ratio of 1.55.

Another notable valuation metric for BYD is its P/B ratio of 3.17. 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, ERI has a P/B of 3.62.

These metrics, and several others, help BYD earn a Value grade of B, while ERI has been given a Value grade of D.

BYD 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 BYD is likely the superior value option right now.


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Zacks Investment Research
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