FOX vs. NFLX: Which Stock Is the Better Value Option?

Investors with an interest in Broadcast Radio and Television stocks have likely encountered both Fox Corporation (FOX) and Netflix (NFLX). But which of these two stocks presents investors with the better value opportunity right now? 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, Fox Corporation has a Zacks Rank of #2 (Buy), while Netflix has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that FOX is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

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.

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.

FOX currently has a forward P/E ratio of 11.82, while NFLX has a forward P/E of 49.35. We also note that FOX has a PEG ratio of 1.17. 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 2.27.

Another notable valuation metric for FOX is its P/B ratio of 2.01. 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 22.15.

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

FOX is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that FOX is likely the superior value option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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