Investors looking for stocks in the Broadcast Radio and Television sector might want to consider either Nexstar Broadcasting Group (NXST) or Netflix (NFLX). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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, Nexstar Broadcasting Group is sporting a Zacks Rank of #2 (Buy), while Netflix has a Zacks Rank of #3 (Hold). This means that NXST's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
NXST currently has a forward P/E ratio of 16.21, while NFLX has a forward P/E of 99.62. We also note that NXST has a PEG ratio of 1.62. 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. NFLX currently has a PEG ratio of 3.32.
Another notable valuation metric for NXST is its P/B ratio of 2.54. 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 23.29.
These are just a few of the metrics contributing to NXST's Value grade of B and NFLX's Value grade of F.
NXST 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 NXST is likely the superior value option right now.
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Nexstar Broadcasting Group, Inc. (NXST) : Free Stock Analysis Report
Netflix, Inc. (NFLX) : Free Stock Analysis Report
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