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 companies is the best option for those looking for undervalued stocks? 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Gray Television has a Zacks Rank of #2 (Buy), while British Sky Broadcasting Group PLC has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that GTN is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle 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.
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.
GTN currently has a forward P/E ratio of 7.69, while SKYAY has a forward P/E of 24.19. We also note that GTN has a PEG ratio of 0.77. 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 1.86.
Another notable valuation metric for GTN is its P/B ratio of 1.43. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, SKYAY has a P/B of 6.74.
These are just a few of the metrics contributing to GTN's Value grade of A and SKYAY's Value grade of C.
GTN stands above SKYAY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that GTN is 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.