Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 6 stocks made the list for top value stocks in the Entertainment industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Why Focus on Undervalued Entertainment Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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6 Undervalued Entertainment Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 6 undervalued stocks in the Entertainment industry for Friday, November 15, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Entertainment industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

iQIYI, Inc.’s Value Grade

Value Grade:

iQIYI, Inc., together with its subsidiaries, provides online entertainment video services in the People’s Republic of China. It offers various products and services, including online video, online games, online literature, animations, and other products. The company operates a platform that provides a collection of internet video content, such as professionally produced content licensed from professional content providers and self-produced content. It also offers membership, online advertising, content distribution, and live broadcasting services. In addition, the company operates iQIYI Show, a live broadcasting platform that enables users to follow their favorite hosts and shows in real time through live broadcasting; and iQIYI Lite that offers an easy and quick access to the personalized videos based on their user preferences. Further, it is involved in the talent agency and IP licensing activities, as well as engages in developing a video community app. The company was formerly known as Qiyi.com, Inc. and changed its name to iQIYI, Inc. in November 2017. iQIYI, Inc. was incorporated in 2009 and is headquartered in Beijing, China. iQIYI, Inc. is a subsidiary of Baidu, Inc.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

iQIYI, Inc. has a Value Score of 98, which is considered to be undervalued.

When you look at iQIYI, Inc.’s price-to-sales ratio at 0.07 compared to the industry median at 1.10, this company has a lower price relative to revenue compared to its peers. This could make iQIYI, Inc.’s stock more attractive for value investors.

iQIYI, Inc.’s price-earnings ratio is 9.20 compared to the industry median at 19.90. This means it has a lower share price relative to earnings compared to its peers. This could make iQIYI, Inc. more attractive for value investors.

Now, let’s assess iQIYI, Inc.’s EV/EBITDA ratio, also known as enterprise multiple. At 3.7, when compared to the industry median of 13.3, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. iQIYI, Inc.’s shareholder yield is higher than its industry median ratio of (0.70%). Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. iQIYI, Inc.’s price-to-book ratio is lower than its industry median ratio of 1.25. This could make iQIYI, Inc. more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at iQIYI, Inc.’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. iQIYI, Inc.’s price-to-free-cash-flow ratio is lower than its industry median ratio of 24.60. This could make iQIYI, Inc. more attractive because the lower P/FCF ratio indicates that iQIYI, Inc. is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

Madison Square Garden Entertainment Corp.’s Value Grade

Value Grade:

Madison Square Garden Entertainment Corp., through its subsidiaries, engages in live entertainment business. The company produces, presents, and hosts live entertainment events, including concerts, sporting events, family shows, family shows, performing arts events, and special events. It operates a collection of venues, including Madison Square Garden, The Theater at Madison Square Garden, Radio City Music Hall, the Beacon Theatre, and The Chicago Theatre; owns and produces the original production, the Christmas Spectacular Starring the Radio City Rockettes; and engages in the entertainment and sports bookings business, which showcases a range of concerts, family shows, and special events, as well as various sporting events. The company was formerly known as MSGE Spinco, Inc. Madison Square Garden Entertainment Corp. was incorporated in 2022 and is based in New York, New York.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Madison Square Garden Entertainment Corp. has a Value Score of 61, which is considered to be undervalued.

Madison Square Garden Entertainment Corp.’s price-earnings ratio is 9.8 compared to the industry median at 19.9. This means that it has a lower price relative to its earnings compared to its peers. This makes Madison Square Garden Entertainment Corp. more attractive for value investors.

You can read more about Madison Square Garden Entertainment Corp.’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

PLAYSTUDIOS, Inc.’s Value Grade

Value Grade:

PLAYSTUDIOS, Inc. develops and publishes free-to-play casual games for mobile and social platforms in the United States and internationally. The company’s game portfolio includes a diverse range of titles comprising social casino, card, puzzle, and adventure games. It also offers POP! Slots, myVEGAS Slots, my KONAMI Slots, MGM Slots Live, myVEGAS Blackjack, myVEGAS Bingo, Tetris, Solitaire, Spider Solitaire, Jumbline 2, Sudoku, and Mahjong games. PLAYSTUDIOS, Inc. is headquartered in Las Vegas, Nevada.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

PLAYSTUDIOS, Inc. has a Value Score of 97, which is considered to be undervalued.

PLAYSTUDIOS, Inc.’s price-to-book ratio is higher than its peers. This could make PLAYSTUDIOS, Inc. less attractive for value investors when compared to the industry median at 1.25.

You can read more about PLAYSTUDIOS, Inc.’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

NIP Group Inc.’s Value Grade

Value Grade:

NIP Group Inc., through its subsidiaries, operates as an esports company primarily in the People’s Republic of China, Sweden, and internationally. It operates Ninjas in Pyjamas, a PC/console esports brand; eStar Gaming, a mobile esports brand. The company also operates a portfolio of esports teams competing at various level in video game titles; and engages in talent management, event production, creative studios, and advertising businesses. In addition, it offers esports education related services to educational institutions; and licenses companies to use the image, including AI and virtual image of its athletes for promotion. NIP Group Inc. was incorporated in 2021 and is based in Stockholm, Sweden.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

NIP Group Inc. has a Value Score of 93, which is considered to be undervalued.

NIP Group Inc.’s price-to-book ratio is higher than its peers. This could make NIP Group Inc. less attractive for value investors when compared to the industry median at 1.25.

You can read more about NIP Group Inc.’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Sohu.com Limited’s Value Grade

Value Grade:

Sohu.com Limited engages in the provision of online media, video, and game products and services on personal computers (PCs) and mobile devices in China. It operates through two segments: Sohu and Changyou. The company offers online news, information, and content services through the mobile phone application Sohu News APP, mobile portal m.sohu.com, and www.sohu.com for PCs; and online video content and services through mobile phone application Sohu Video APP and tv.sohu.com, as well as ifox, a video application for PC. It also operates Focus (www.focus.cn), which provides online real estate information and services; and 17173.com website, which provides news, electronic forums, online videos, and other online game information services to game players, as well as offers mobile game distribution services. In addition, the company offers interactive online games for PCs and mobile devices. Further, it provides paid subscription and interactive broadcasting services. The company was incorporated in 1996 and is headquartered in Beijing, China.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Sohu.com Limited has a Value Score of 95, which is considered to be undervalued.

Sohu.com Limited’s price-to-book ratio is higher than its peers. This could make Sohu.com Limited less attractive for value investors when compared to the industry median at 1.25.

You can read more about Sohu.com Limited’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Tencent Music Entertainment Group’s Value Grade

Value Grade:

Tencent Music Entertainment Group operates online music entertainment platforms to provide music streaming, online karaoke, and live streaming services in the People’s Republic of China. It offers QQ Music, Kugou Music, and Kuwo Music that enable users to discover music in personalized ways; long-form audio content, including audiobooks, podcasts and talk shows, as well as music-oriented video content comprising music videos, live performances, and short videos; and WeSing, which enables users to sing along from its library of karaoke songs and share their performances in audio or video formats with friends. The company also delivers music-centric live streaming services primarily through the Live Streaming tab on QQ Music, Kugou Music, Kuwo Music, WeSing, Kugou Live, and Kuwo Live that provides an interactive online stage for performers and users to showcase their talent and engage with a diverse audience base; and Lazy Audio, an audio platform. In addition, it sells music-related merchandise; and artist-related merchandise, such as branded apparel, posters and art prints, and accessories and integrated and technology-driven music solutions that help IoT device manufacturers build and operate their branded music services on their IoT devices, as well as offers advertising services across its online karaoke platform and online music apps. The company is headquartered in Shenzhen, China. Tencent Music Entertainment Group is a subsidiary of Tencent Holdings Limited.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Tencent Music Entertainment Group has a Value Score of 81, which is considered to be undervalued.

Tencent Music Entertainment Group’s price-earnings ratio is 19.9 compared to the industry median at 19.9. This means that it has a higher price relative to its earnings compared to its peers. This makes Tencent Music Entertainment Group fairly attractive for value investors.

Tencent Music Entertainment Group’s price-to-book ratio is higher than its peers. This could make Tencent Music Entertainment Group less attractive for value investors when compared to the industry median at 1.25.

You can read more about Tencent Music Entertainment Group’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Entertainment Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Entertainment stocks as well as other industrys.

Choosing Which of the 6 Best Entertainment Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• iQIYI, Inc. stock has a Value Grade of A.
• Madison Square Garden Entertainment Corp. stock has a Value Grade of B.
• PLAYSTUDIOS, Inc. stock has a Value Grade of A.
• NIP Group Inc. stock has a Value Grade of A.
• Sohu.com Limited stock has a Value Grade of A.
• Tencent Music Entertainment Group stock has a Value Grade of A.

Now that you have a bit more background about each of the 6 undervalued stocks in the Entertainment industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Entertainment Stocks

Want to learn more about Entertainment stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 6 Undervalued Entertainment Stocks for Friday, November 15
• 5 Undervalued Entertainment Stocks for Thursday, November 14
• 3 Undervalued Entertainment Stocks for Wednesday, November 13
• 4 Undervalued Entertainment Stocks for Tuesday, November 12

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.