FOX vs. ROKU: Which Stock Should Value Investors Buy Now?

Investors interested in stocks from the Broadcast Radio and Television sector have probably already heard of Fox Corporation (FOX) and Roku (ROKU). But which of these two stocks presents investors with the better value opportunity right now? 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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Fox Corporation and Roku are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. This means that FOX's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture 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 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 13.05, while ROKU has a forward P/E of 691.42. We also note that FOX has a PEG ratio of 1.29. 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. ROKU currently has a PEG ratio of 11.32.

Another notable valuation metric for FOX is its P/B ratio of 1.94. 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, ROKU has a P/B of 5.46.

These are just a few of the metrics contributing to FOX's Value grade of A and ROKU's 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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