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

Investors interested in Broadcast Radio and Television stocks are likely familiar with Fox Corporation (FOX) 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 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.

Currently, Fox Corporation has a Zacks Rank of #1 (Strong Buy), while Netflix has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that FOX has an improving earnings outlook. But this is only part of the picture for value investors.

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 13.34, while NFLX has a forward P/E of 43.56. We also note that FOX has a PEG ratio of 1.32. 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 1.91.

Another notable valuation metric for FOX is its P/B ratio of 2.14. 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 18.02.

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

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

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

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