Investors interested in stocks from the Broadcast Radio and Television sector have probably already heard of 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.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.
Both Gray Television and Netflix have a Zacks Rank of # 2 (Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is just one factor that value investors are interested in.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
GTN currently has a forward P/E ratio of 6.19, while NFLX has a forward P/E of 59.45. We also note that GTN has a PEG ratio of 0.62. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. NFLX currently has a PEG ratio of 1.98.
Another notable valuation metric for GTN is its P/B ratio of 1.33. 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 20.84.
These are just a few of the metrics contributing to GTN's Value grade of A and NFLX's Value grade of F.
Both GTN and NFLX are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that GTN is the superior value option right now.