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Are Investors Undervaluing AMC Networks (AMCX) Right Now?

Zacks Equity Research

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One stock to keep an eye on is AMC Networks (AMCX). AMCX is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A.

Investors will also notice that AMCX has a PEG ratio of 0.58. 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. AMCX's PEG compares to its industry's average PEG of 1.40. AMCX's PEG has been as high as 1.09 and as low as 0.58, with a median of 0.76, all within the past year.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. AMCX has a P/S ratio of 0.83. This compares to its industry's average P/S of 1.

These are only a few of the key metrics included in AMC Networks's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, AMCX looks like an impressive value stock at the moment.


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