Investors looking for stocks in the Cable Television sector might want to consider either Comcast (CMCSA) or Rogers Communication (RCI). But which of these two stocks presents investors with the better value opportunity right now? 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Right now, both Comcast and Rogers Communication are sporting a Zacks Rank of # 2 (Buy). 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 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.
CMCSA currently has a forward P/E ratio of 14.85, while RCI has a forward P/E of 15.97. We also note that CMCSA has a PEG ratio of 1.19. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. RCI currently has a PEG ratio of 3.19.
Another notable valuation metric for CMCSA is its P/B ratio of 2.42. 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, RCI has a P/B of 4.47.
These metrics, and several others, help CMCSA earn a Value grade of B, while RCI has been given a Value grade of C.
Both CMCSA and RCI are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CMCSA is the superior value option right now.
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