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Investors with an interest in Broadcast Radio and Television stocks have likely encountered both Fox (FOXA) and Netflix (NFLX). But which of these two stocks presents investors with the better value opportunity right now? Let's 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.
Both Fox and Netflix have 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 these stocks have improving earnings outlooks. But this is just one piece of the puzzle for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.
FOXA currently has a forward P/E ratio of 12.87, while NFLX has a forward P/E of 39.19. We also note that FOXA has a PEG ratio of 1.25. 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.
Another notable valuation metric for FOXA is its P/B ratio of 2.21. 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 16.65.
Based on these metrics and many more, FOXA holds a Value grade of B, while NFLX has a Value grade of F.
Both FOXA and NFLX are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that FOXA is the superior value option right now.
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Fox Corporation (FOXA) : Free Stock Analysis Report
Netflix, Inc. (NFLX) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).