Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 3 stocks made the list for top value stocks in the Casinos & Gaming industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Why Focus on Undervalued Casinos & Gaming Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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3 Undervalued Casinos & Gaming Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 3 undervalued stocks in the Casinos & Gaming industry for Wednesday, May 15, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Casinos & Gaming industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Everi Holdings Inc’s Value Grade

Value Grade:

Everi Holdings Inc. develops and offers products and services that provide gaming entertainment, improve its customers’ patron engagement, and help its casino customers operate their businesses. It develops and supplies entertaining game content, gaming machines and gaming systems and services for land-based and iGaming operators. It operates through two segments: Games and Financial Technology Solutions (FinTech). The Games segment provides gaming operators with gaming technology and entertainment products and services, including gaming machines, primarily comprising Class II, Class III and Historic Horse Racing slot machines placed under participation and fixed-fee lease arrangements or sold to casino customers. The FinTech segment provides gaming operators with financial technology products and services, including financial access and related services supporting digital, cashless and physical cash options across mobile, assisted and self-service channels.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Everi Holdings Inc has a Value Score of 86, which is considered to be undervalued.

When you look at Everi Holdings Inc’s price-to-sales ratio at 0.81 compared to the industry median at 1.03, this company has a lower price relative to revenue compared to its peers. This could make Everi Holdings Inc’s stock more attractive for value investors.

Everi Holdings Inc’s price-earnings ratio is 11.71 compared to the industry median at 15.80. This means it has a lower share price relative to earnings compared to its peers. This could make Everi Holdings Inc more attractive for value investors.

Now, let’s assess Everi Holdings Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 5.3, when compared to the industry median of 9.1, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Everi Holdings Inc’s shareholder yield is higher than its industry median ratio of 0.67%. Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Everi Holdings Inc’s price-to-book ratio is higher than its industry median ratio of 2.71. This could make Everi Holdings Inc less attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Everi Holdings Inc’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Everi Holdings Inc’s price-to-free-cash-flow ratio is lower than its industry median ratio of 17.31. This could make Everi Holdings Inc more attractive because the lower P/FCF ratio indicates that Everi Holdings Inc is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

International Game Technology PLC’s Value Grade

Value Grade:

International Game Technology PLC is a United Kingdom-based company, which is engaged in gaming. The Company operates and provides an integrated portfolio of gaming technology products and services, including online and instant lottery systems, iLottery, instant ticket printing, lottery management services, commercial services, gaming systems, electronic gaming machines, iGaming, and sports betting. The Company operates through three segments. The Global Lottery segment operates traditional lottery and iLottery businesses across the world, which includes sales, operations, product development, technology, and support, across the world. The Global Gaming segment operates a land-based gaming business across the world, which includes sales, product management, studios, global manufacturing, operation, and technology, across the world. The Digital & Betting segment operates iGaming and sports betting activities across the world.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

International Game Technology PLC has a Value Score of 66, which is considered to be undervalued.

International Game Technology PLC’s price-earnings ratio is 26.2 compared to the industry median at 15.8. This means that it has a higher price relative to its earnings compared to its peers. This makes International Game Technology PLC less attractive for value investors.

International Game Technology PLC’s price-to-book ratio is lower than its peers. This could make International Game Technology PLC more attractive for value investors when compared to the industry median at 2.71.

You can read more about International Game Technology PLC’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

MGM Resorts International’s Value Grade

Value Grade:

MGM Resorts International is a holding company. The Company, through subsidiaries, is a global gaming and entertainment company with domestic and international locations. The Company's segments include Las Vegas Strip Resorts, Regional Operations, and MGM China. The Las Vegas Strip Resorts segment consists of casino resorts: Aria (including Vdara), Bellagio, The Cosmopolitan of Las Vegas; MGM Grand Las Vegas, Mandalay Bay (including Delano and Four Seasons), Luxor, New York-New York (including The Park), Excalibur, and Park MGM (including NoMad Las Vegas). The Regional Operations consist of casino properties: MGM Grand Detroit in Detroit, Michigan; Beau Rivage in Biloxi, Mississippi; Borgata in Atlantic City, New Jersey; MGM National Harbor in Prince George’s County, Maryland; MGM Springfield in Springfield, Massachusetts; Empire City in Yonkers, New York, and MGM Northfield Park in Northfield Park, Ohio. It operates approximately 16 domestic casino properties.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

MGM Resorts International has a Value Score of 74, which is considered to be undervalued.

MGM Resorts International’s price-earnings ratio is 15.7 compared to the industry median at 15.8. This means that it has a lower price relative to its earnings compared to its peers. This makes MGM Resorts International more attractive for value investors.

MGM Resorts International’s price-to-book ratio is lower than its peers. This could make MGM Resorts International more attractive for value investors when compared to the industry median at 2.71.

You can read more about MGM Resorts International’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Casinos & Gaming Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Casinos & Gaming stocks as well as other industrys.

Choosing Which of the 3 Best Casinos & Gaming Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Everi Holdings Inc stock has a Value Grade of A.
• International Game Technology PLC stock has a Value Grade of B.
• MGM Resorts International stock has a Value Grade of B.

Now that you have a bit more background about each of the 3 undervalued stocks in the Casinos & Gaming industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Casinos & Gaming Stocks

Want to learn more about Casinos & Gaming stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 3 Undervalued Casinos & Gaming Stocks for Wednesday, May 15
• 3 Undervalued Casinos & Gaming Stocks for Tuesday, May 14
• What You Need to Know About International Game Technology PLC's Q1 Earnings
• Why DoubleDown Interactive Co Ltd (ADR)’s (DDI) Stock Is Down 14.00%

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.