MAT or TTWO: Which Is the Better Value Stock Right Now?
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Investors interested in Toys - Games - Hobbies stocks are likely familiar with Mattel (MAT) and Take-Two Interactive (TTWO). 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 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.
Mattel has a Zacks Rank of #2 (Buy), while Take-Two Interactive has a Zacks Rank of #3 (Hold) right now. This means that MAT'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.
MAT currently has a forward P/E ratio of 13.39, while TTWO has a forward P/E of 59.25. We also note that MAT has a PEG ratio of 1.25. 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 1.82.
Another notable valuation metric for MAT is its P/B ratio of 3.30. 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, TTWO has a P/B of 4.38.
These metrics, and several others, help MAT earn a Value grade of A, while TTWO has been given a Value grade of F.
MAT 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 MAT is likely the superior value option right now.
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Mattel, Inc. (MAT) : Free Stock Analysis Report
Take-Two Interactive Software, Inc. (TTWO) : Free Stock Analysis Report