Investors looking for stocks in the Diversified Communication Services sector might want to consider either Deutsche Telekom AG (DTEGY) or PT Telekomunikasi (TLK). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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.
Right now, Deutsche Telekom AG is sporting a Zacks Rank of #2 (Buy), while PT Telekomunikasi has a Zacks Rank of #3 (Hold). This means that DTEGY'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 analyze a variety of traditional, tried-and-true metrics to help find companies 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.
DTEGY currently has a forward P/E ratio of 12.75, while TLK has a forward P/E of 13.58. We also note that DTEGY has a PEG ratio of 1.24. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. TLK currently has a PEG ratio of 2.85.
Another notable valuation metric for DTEGY is its P/B ratio of 1.55. 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, TLK has a P/B of 2.23.
Based on these metrics and many more, DTEGY holds a Value grade of A, while TLK has a Value grade of C.
DTEGY 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 DTEGY is likely the superior value option right now.
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Deutsche Telekom AG (DTEGY): Free Stock Analysis Report PT Telekomunikasi Indonesia, Tbk (TLK): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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