Investors with an interest in Film and Television Production and Distribution stocks have likely encountered both Lions Gate Entertainment (LGF.A) and Imax (IMAX). But which of these two stocks is more attractive to value investors? We’ll need to take a closer look to find out.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Lions Gate Entertainment has a Zacks Rank of #2 (Buy), while Imax has a Zacks Rank of #4 (Sell). This means that LGF.A’s earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
LGF.A currently has a forward P/E ratio of 16.34, while IMAX has a forward P/E of 199.08. We also note that LGF.A has a PEG ratio of 1.09. 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. IMAX currently has a PEG ratio of 11.38.
Another notable valuation metric for LGF.A is its P/B ratio of 1.17. Investors use the P/B ratio to look at a stock’s market value versus its book value, which is defined as total assets minus total liabilities. By comparison, IMAX has a P/B of 2.42.
These metrics, and several others, help LGF.A earn a Value grade of B, while IMAX has been given a Value grade of D.
LGF.A stands above IMAX thanks to its solid earnings outlook, and based on these valuation figures, we also feel that LGF.A is the superior value option right now.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.