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TSQ or NFLX: Which Is the Better Value Stock Right Now?

Zacks Equity Research
Amber Road (AMBR) is at a 52-week high, but can investors hope for more gains in the future? We take a look at the company's fundamentals for clues.

Investors with an interest in Broadcast Radio and Television stocks have likely encountered both Townsquare Media (TSQ) and Netflix (NFLX). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Right now, Townsquare Media is sporting a Zacks Rank of #1 (Strong Buy), while Netflix has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that TSQ is likely seeing its earnings outlook improve to a greater extent. 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.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

TSQ currently has a forward P/E ratio of 4.79, while NFLX has a forward P/E of 65.85. We also note that TSQ has a PEG ratio of 0.40. 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 2.19.

Another notable valuation metric for TSQ is its P/B ratio of 0.26. 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 23.30.

Based on these metrics and many more, TSQ holds a Value grade of A, while NFLX has a Value grade of F.

TSQ 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 TSQ is likely the superior value option right now.


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