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Investors interested in Gaming stocks are likely familiar with MGM Resorts (MGM) and Churchill Downs (CHDN). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

MGM Resorts has a Zacks Rank of #1 (Strong Buy), while Churchill Downs has a Zacks Rank of #2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that MGM is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.

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.

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.

MGM currently has a forward P/E ratio of 14.99, while CHDN has a forward P/E of 22.96. We also note that MGM has a PEG ratio of 0.93. 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. CHDN currently has a PEG ratio of 3.06.

Another notable valuation metric for MGM is its P/B ratio of 3.40. 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, CHDN has a P/B of 12.33.

These metrics, and several others, help MGM earn a Value grade of A, while CHDN has been given a Value grade of C.

MGM sticks out from CHDN in both our Zacks Rank and Style Scores models, so value investors will likely feel that MGM is the better option right now.

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