Investors with an interest in Broadcast Radio and Television stocks have likely encountered both TEGNA Inc. (TGNA) and Gaiam (GAIA). 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Currently, TEGNA Inc. has a Zacks Rank of #2 (Buy), while Gaiam has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that TGNA has an improving earnings outlook. But this is just one factor that value investors are interested in.
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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
TGNA currently has a forward P/E ratio of 11.18, while GAIA has a forward P/E of 84.17. We also note that TGNA has a PEG ratio of 1.12. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. GAIA currently has a PEG ratio of 4.81.
Another notable valuation metric for TGNA is its P/B ratio of 2.20. 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, GAIA has a P/B of 2.61.
These are just a few of the metrics contributing to TGNA's Value grade of A and GAIA's Value grade of C.
TGNA has seen stronger estimate revision activity and sports more attractive valuation metrics than GAIA, so it seems like value investors will conclude that TGNA is the superior option right now.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
