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Should Value Investors Buy Townsquare Media (TSQ) Stock?

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Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

Townsquare Media (TSQ - Free Report) is a stock many investors are watching right now. TSQ is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 7, which compares to its industry's average of 19.67. Over the past year, TSQ's Forward P/E has been as high as 8.71 and as low as 3.13, with a median of 4.21.

Another valuation metric that we should highlight is TSQ's P/B ratio of 1.97. 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. TSQ's current P/B looks attractive when compared to its industry's average P/B of 3.61. Over the past 12 months, TSQ's P/B has been as high as 4.59 and as low as 1.94, with a median of 2.64.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. TSQ has a P/S ratio of 0.28. This compares to its industry's average P/S of 0.47.

Finally, our model also underscores that TSQ has a P/CF ratio of 3.76. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. TSQ's P/CF compares to its industry's average P/CF of 10.07. TSQ's P/CF has been as high as 7.11 and as low as 3.17, with a median of 4.10, all within the past year.

Value investors will likely look at more than just these metrics, but the above data helps show that Townsquare Media is likely undervalued currently. And when considering the strength of its earnings outlook, TSQ sticks out at as one of the market's strongest value stocks.


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