Investors with an interest in Broadcast Radio and Television stocks have likely encountered both AMC Networks (AMCX) and Netflix (NFLX). 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 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.
AMC Networks has a Zacks Rank of #2 (Buy), while Netflix has a Zacks Rank of #3 (Hold) 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. However, value investors will care about much more than just this.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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 7.35, while NFLX has a forward P/E of 86.42. We also note that AMCX has a PEG ratio of 1.02. 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. NFLX currently has a PEG ratio of 2.88.
Another notable valuation metric for AMCX is its P/B ratio of 12.09. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, NFLX has a P/B of 29.14.
Based on these metrics and many more, AMCX holds a Value grade of A, while NFLX has a Value grade of F.
AMCX stands above NFLX thanks to its solid earnings outlook, and based on these valuation figures, we also feel that AMCX is the superior value option right now.
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AMC Networks Inc. (AMCX) : Free Stock Analysis Report
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