Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?

One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put AMC Networks Inc. (AMCX Quick QuoteAMCX - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:

PE Ratio

A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.

On this front, AMC Networks has a trailing twelve months PE ratio of 9.69. This level compares pretty favorably with the market at large, as the PE ratio for the S&P 500 comes in at about 20.38.

If we focus on the long-term trend of the stock the current level puts AMC Networks’ current PE near its lowest level over the observed period, which stands at 9.32. This suggests that the stock is undervalued compared to its own historical levels and thus it could be an extremely suitable entry point from the PE perspective.

Further, the stock’s PE also compares extremely favorably with the Zacks classified Broadcast Radio and Television industry’s trailing twelve months PE ratio, which stands at 23.79. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.

We should also point out that AMC Networks has a forward PE ratio (price relative to this year’s earnings) of just 8.38, so it is fair to say that a slightly more value-oriented path may be ahead for AMC Networks stock in the near term too.

PS Ratio

Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.

Right now, AMC Networks has a P/S ratio of about 1.34. This is lower than the Zacks categorized Broadcast Radio and Television industry average, which comes in at 8.83 right now.

If anything, AMCX is in the lower end of its range in the time period from a P/S metric, suggesting some level of undervalued trading—at least compared to historical norms.

Broad Value Outlook

In aggregate, AMC Networks currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes AMC Networks a solid choice for value investors, and some of its other key metrics make this pretty clear too.

For example, the PEG ratio for AMC Networks is just 0.81, a level that is far lower than the industry average of 2.21. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, AMCX is a solid choice on the value front from multiple angles.

What About the Stock Overall?

Though AMC Networks might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘A’ and a Momentum score of ‘F’. This gives AMCX a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)

Meanwhile, the company’s earnings estimates have been mixed at best. The current quarter has seen no estimates go higher in the past sixty days compared to three lower, while the full year estimate has seen two upward revisions and three downward revisions in the same time period.

This has had a small but meaningful impact on the consensus estimate as the current quarter consensus estimate has moved lower by 5.3% over the past two months, while the full year estimate has increased 0.6%. You can see the consensus estimate trend and recent price action for the stock in the chart below:

AMC Networks Inc. Price and Consensus

This somewhat mixed trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.

Bottom Line

AMC Networks is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a sluggish industry rank (Bottom 15% out of more than 250 industries) and a Zacks Rank #3, it is hard to get too excited about this company overall. In fact, over the past two years, the Zacks Broadcast Radio and Television industry has clearly underperformed the broader market, as you can see below:

So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.

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