Investors interested in stocks from the Broadcast Radio and Television sector have probably already heard of AMC Networks (AMCX) and Sirius XM (SIRI). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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.
AMC Networks and Sirius XM are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. This means that AMCX's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture 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.
AMCX currently has a forward P/E ratio of 6.14, while SIRI has a forward P/E of 29.22. We also note that AMCX has a PEG ratio of 0.70. 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. SIRI currently has a PEG ratio of 2.83.
Another notable valuation metric for AMCX is its P/B ratio of 6.13. 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, SIRI has a P/B of 181.43.
These metrics, and several others, help AMCX earn a Value grade of A, while SIRI has been given a Value grade of D.
AMCX has seen stronger estimate revision activity and sports more attractive valuation metrics than SIRI, so it seems like value investors will conclude that AMCX is the superior option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
AMC Networks Inc. (AMCX) : Free Stock Analysis Report
Sirius XM Holdings Inc. (SIRI) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research