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TV vs. NFLX: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
Updated
Mutual Fund Report for PGOFX

Investors interested in stocks from the Broadcast Radio and Television sector have probably already heard of Grupo Televisa (TV) 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.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Grupo Televisa and Netflix are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that TV has an improving earnings outlook. But this is just one factor that value investors are interested in.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.

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Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

TV currently has a forward P/E ratio of 22.97, while NFLX has a forward P/E of 131.62. We also note that TV has a PEG ratio of 0.72. 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 4.39.

Another notable valuation metric for TV is its P/B ratio of 1.82. 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 34.03.

These are just a few of the metrics contributing to TV's Value grade of B and NFLX's Value grade of F.

TV stands above NFLX thanks to its solid earnings outlook, and based on these valuation figures, we also feel that TV is the superior value option right now.


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Grupo Televisa S.A. (TV) : Free Stock Analysis Report
 
Netflix, Inc. (NFLX) : Free Stock Analysis Report
 
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Zacks Investment Research