Back to top

Image: Bigstock

GTN vs. NFLX: Which Stock Should Value Investors Buy Now?

Read MoreHide Full Article

Investors with an interest in Broadcast Radio and Television stocks have likely encountered both Gray Television (GTN - Free Report) and Netflix (NFLX - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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 has a Zacks Rank of #2 (Buy), while Netflix has a Zacks Rank of #3 (Hold) right now. 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. 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 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.

GTN currently has a forward P/E ratio of 4.56, while NFLX has a forward P/E of 19.81. We also note that GTN has a PEG ratio of 0.46. 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. NFLX currently has a PEG ratio of 1.12.

Another notable valuation metric for GTN is its P/B ratio of 1.10. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, NFLX has a P/B of 5.46.

Based on these metrics and many more, GTN holds a Value grade of A, while NFLX has a Value grade of C.

GTN sticks out from NFLX in both our Zacks Rank and Style Scores models, so value investors will likely feel that GTN is the better option right now.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Netflix, Inc. (NFLX) - free report >>

Gray Television, Inc. (GTN) - free report >>

Published in