Investors looking for stocks in the Broadcast Radio and Television sector might want to consider either AMC Networks (AMCX - Free Report) or 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.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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.
AMC Networks and Netflix are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. This means that AMCX's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture 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.
AMCX currently has a forward P/E ratio of 7.48, while NFLX has a forward P/E of 137.93. We also note that AMCX has a PEG ratio of 1.33. 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 4.87.
Another notable valuation metric for AMCX is its P/B ratio of 14.24. 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 43.07.
These are just a few of the metrics contributing to AMCX's Value grade of A and NFLX's Value grade of F.
AMCX has seen stronger estimate revision activity and sports more attractive valuation metrics than NFLX, so it seems like value investors will conclude that AMCX is the superior option right now.