Investors with an interest in Film and Television Production and Distribution stocks have likely encountered both Lions Gate Entertainment (LGF.A) and Twenty-First Century Fox (FOXA). But which of these two companies is the best option for those looking for undervalued stocks? 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Lions Gate Entertainment is sporting a Zacks Rank of #2 (Buy), while Twenty-First Century Fox has a Zacks Rank of #3 (Hold). This means that LGF.A's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
LGF.A currently has a forward P/E ratio of 16.66, while FOXA has a forward P/E of 25.13. We also note that LGF.A has a PEG ratio of 1.51. 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. FOXA currently has a PEG ratio of 2.71.
Another notable valuation metric for LGF.A is its P/B ratio of 1.26. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, FOXA has a P/B of 4.14.
Based on these metrics and many more, LGF.A holds a Value grade of A, while FOXA has a Value grade of D.
LGF.A has seen stronger estimate revision activity and sports more attractive valuation metrics than FOXA, so it seems like value investors will conclude that LGF.A is the superior option right now.
Lions Gate Entertainment Corp. (LGF.A): Get Free Report
Twenty-First Century Fox, Inc. (FOXA): Free Stock Analysis Report
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Zacks Investment Research