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

Zacks Equity Research
·2-min read

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 companies is the best option for those looking for undervalued stocks? 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, Nexstar Broadcasting Group has 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. But this is just one piece of the puzzle for value investors.

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 6.70, while NFLX has a forward P/E of 78.48. We also note that NXST has a PEG ratio of 0.67. 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 2.62.

Another notable valuation metric for NXST is its P/B ratio of 2.09. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, NFLX has a P/B of 21.01.

These metrics, and several others, help NXST earn a Value grade of A, while NFLX has been given a Value grade of D.

NXST has seen stronger estimate revision activity and sports more attractive valuation metrics than NFLX, so it seems like value investors will conclude that NXST is the superior option right now.


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Nexstar Media Group, Inc (NXST) : Free Stock Analysis Report
 
Netflix, Inc. (NFLX) : Free Stock Analysis Report
 
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Zacks Investment Research