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

Zacks Equity Research
·2-min read

Investors interested in Broadcast Radio and Television stocks are likely familiar with Townsquare Media (TSQ) 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Townsquare Media 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 TSQ has an improving earnings outlook. 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.

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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.

TSQ currently has a forward P/E ratio of 4.61, while NFLX has a forward P/E of 24.45. We also note that TSQ has a PEG ratio of 0.38. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. NFLX currently has a PEG ratio of 1.71.

Another notable valuation metric for TSQ is its P/B ratio of 2.78. 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 5.72.

These are just a few of the metrics contributing to TSQ's Value grade of A and NFLX's Value grade of C.

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


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Townsquare Media, Inc. (TSQ) : Free Stock Analysis Report
 
Netflix, Inc. (NFLX) : Free Stock Analysis Report
 
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Zacks Investment Research