Investors interested in stocks from the Broadcast Radio and Television sector have probably already heard of AMC Networks (AMCX) and Netflix (NFLX). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
AMC Networks has a Zacks Rank of #1 (Strong Buy), while Netflix has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that AMCX likely has seen a stronger improvement to its earnings outlook than NFLX has recently. But this is just one factor that value investors are interested in.
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.
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.
AMCX currently has a forward P/E ratio of 7, while NFLX has a forward P/E of 92.44. We also note that AMCX has a PEG ratio of 0.97. 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 3.08.
Another notable valuation metric for AMCX is its P/B ratio of 9.72. 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 30.64.
These are just a few of the metrics contributing to AMCX's Value grade of B and NFLX's Value grade of F.
AMCX is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that AMCX is likely the superior value option right now.
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AMC Networks Inc. (AMCX) : Free Stock Analysis Report
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