Investors interested in stocks from the Diversified Communication Services sector have probably already heard of Telefonica Brasil (VIV) and Chunghwa (CHT). 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.
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.
Telefonica Brasil and Chunghwa are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that VIV likely has seen a stronger improvement to its earnings outlook than CHT has recently. But this is just one piece of the puzzle for value investors.
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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
VIV currently has a forward P/E ratio of 18.16, while CHT has a forward P/E of 25.90. We also note that VIV has a PEG ratio of 0.72. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. CHT currently has a PEG ratio of 5.50.
Another notable valuation metric for VIV is its P/B ratio of 2.07. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, CHT has a P/B of 2.62.
These metrics, and several others, help VIV earn a Value grade of B, while CHT has been given a Value grade of D.
VIV stands above CHT thanks to its solid earnings outlook, and based on these valuation figures, we also feel that VIV is the superior value option right now.
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Telefonica Brasil S.A. (VIV): Free Stock Analysis Report Chunghwa Telecom Co., Ltd. (CHT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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