Investors interested in Broadcast Radio and Television stocks are likely familiar with Fox Corporation (FOX) and Netflix (NFLX). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Fox Corporation has a Zacks Rank of #1 (Strong Buy), while Netflix has a Zacks Rank of #2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that FOX has an improving earnings outlook. However, value investors will care about much more than just this.
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.
FOX currently has a forward P/E ratio of 11.13, while NFLX has a forward P/E of 46.92. We also note that FOX has a PEG ratio of 1.10. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. NFLX currently has a PEG ratio of 2.30.
Another notable valuation metric for FOX is its P/B ratio of 1.96. 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, NFLX has a P/B of 21.04.
These metrics, and several others, help FOX earn a Value grade of A, while NFLX has been given a Value grade of D.
FOX has seen stronger estimate revision activity and sports more attractive valuation metrics than NFLX, so it seems like value investors will conclude that FOX is the superior option right now.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
