Investors with an interest in Broadcast Radio and Television stocks have likely encountered both Nexstar Broadcasting Group (NXST - 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.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, Nexstar Broadcasting Group is sporting a Zacks Rank of #2 (Buy), while Netflix has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that NXST is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
NXST currently has a forward P/E ratio of 13.37, while NFLX has a forward P/E of 88.24. We also note that NXST has a PEG ratio of 1.34. 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 2.94.
Another notable valuation metric for NXST is its P/B ratio of 2.36. 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, NFLX has a P/B of 29.75.
These metrics, and several others, help NXST earn a Value grade of B, while NFLX has been given a Value grade of F.
NXST stands above NFLX thanks to its solid earnings outlook, and based on these valuation figures, we also feel that NXST is the superior value option right now.