Investors with an interest in Broadcast Radio and Television stocks have likely encountered both Sirius XM (SIRI) 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.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Sirius XM and Netflix are sporting Zacks Ranks of #2 (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 SIRI 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.
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.
SIRI currently has a forward P/E ratio of 9.83, while NFLX has a forward P/E of 21.58. We also note that SIRI has a PEG ratio of 0.66. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. NFLX currently has a PEG ratio of 0.99.
Another notable valuation metric for SIRI is its P/B ratio of 0.88. 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 10.51.
These are just a few of the metrics contributing to SIRI's Value grade of A and NFLX's Value grade of D.
SIRI stands above NFLX thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SIRI is the superior value option right now.
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Sirius XM Holdings Inc. (SIRI): Free Stock Analysis Report
Netflix, Inc. (NFLX): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).