Investors interested in Broadcast Radio and Television stocks are likely familiar with Gray Television (GTN) and Netflix (NFLX). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Gray Television has a Zacks Rank of #1 (Strong Buy), while Netflix has a Zacks Rank of #2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that GTN has an improving earnings outlook. But this is just one piece of the puzzle 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.
GTN currently has a forward P/E ratio of 7.16, while NFLX has a forward P/E of 60.69. We also note that GTN has a PEG ratio of 0.72. 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 2.02.
Another notable valuation metric for GTN is its P/B ratio of 1.54. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, NFLX has a P/B of 21.23.
These are just a few of the metrics contributing to GTN's Value grade of A and NFLX's Value grade of F.
GTN stands above NFLX thanks to its solid earnings outlook, and based on these valuation figures, we also feel that GTN is the superior value option right now.