Yahoo Finance MAT vs. TTWO: Which Stock Is the Better Value Option?
Investors with an interest in Toys - Games - Hobbies stocks have likely encountered both Mattel (MAT) and Take-Two Interactive (TTWO). But which of these two companies is the best option for those looking for undervalued stocks? 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, both Mattel and Take-Two Interactive are holding a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is just one piece of the puzzle for value investors.
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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
MAT currently has a forward P/E ratio of 12.81, while TTWO has a forward P/E of 53.46. We also note that MAT has a PEG ratio of 1.19. 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. TTWO currently has a PEG ratio of 1.65.
Another notable valuation metric for MAT is its P/B ratio of 3.16. 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, TTWO has a P/B of 4.20.
These are just a few of the metrics contributing to MAT's Value grade of A and TTWO's Value grade of F.
Both MAT and TTWO are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that MAT is the superior value option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Mattel, Inc. (MAT) : Free Stock Analysis Report
Take-Two Interactive Software, Inc. (TTWO) : Free Stock Analysis Report
