Investors with an interest in Broadcast Radio and Television stocks have likely encountered both Gray Television (GTN) and British Sky Broadcasting Group PLC (SKYAY). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Gray Television and British Sky Broadcasting Group PLC are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that GTN's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.
GTN currently has a forward P/E ratio of 8.66, while SKYAY has a forward P/E of 22.26. We also note that GTN has a PEG ratio of 0.87. 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. SKYAY currently has a PEG ratio of 1.71.
Another notable valuation metric for GTN is its P/B ratio of 1.43. 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, SKYAY has a P/B of 6.93.
Based on these metrics and many more, GTN holds a Value grade of A, while SKYAY has a Value grade of C.
GTN 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 GTN is likely the superior value option right now.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.