Investors looking for stocks in the Broadcast Radio and Television sector might want to consider either Grupo Televisa (TV - Free Report) or E.W. Scripps (SSP - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. 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.
Grupo Televisa has a Zacks Rank of #2 (Buy), while E.W. Scripps has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that TV has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
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.
TV currently has a forward P/E ratio of 22.36, while SSP has a forward P/E of 24.66. We also note that TV has a PEG ratio of 0.70. 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. SSP currently has a PEG ratio of 2.35.
Another notable valuation metric for TV is its P/B ratio of 1.52. 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. By comparison, SSP has a P/B of 1.54.
Based on these metrics and many more, TV holds a Value grade of B, while SSP has a Value grade of D.
TV stands above SSP thanks to its solid earnings outlook, and based on these valuation figures, we also feel that TV is the superior value option right now.