The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One company to watch right now is Telefonica (TEF). TEF is currently holding a Zacks Rank #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 12.6. This compares to its industry's average Forward P/E of 17.64. TEF's Forward P/E has been as high as 15.66 and as low as 11.65, with a median of 13.60, all within the past year.
Investors will also notice that TEF has a PEG ratio of 0.57. 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. TEF's industry has an average PEG of 0.86 right now. Over the last 12 months, TEF's PEG has been as high as 0.82 and as low as 0.57, with a median of 0.74.
Another notable valuation metric for TEF is its P/B ratio of 1.25. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 2.39. Over the past 12 months, TEF's P/B has been as high as 1.36 and as low as 0.86, with a median of 1.05.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. TEF has a P/S ratio of 0.54. This compares to its industry's average P/S of 1.29.
Investors could also keep in mind VEON (VEON), another Diversified Communication Services stock with a Zacks Rank of #2 (Buy) and Value grade of A.
Furthermore, VEON holds a P/B ratio of 2.72 and its industry's price-to-book ratio is 2.39. VEON's P/B has been as high as 3.10, as low as 1.71, with a median of 2.46 over the past 12 months.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Telefonica and VEON are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, TEF and VEON feels like a great value stock at the moment.
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Telefonica SA (TEF): Free Stock Analysis Report VEON Ltd. (VEON): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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