Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One company value investors might notice is Telefonica (TEF). TEF is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 13.09, which compares to its industry's average of 19.83. Over the past year, TEF's Forward P/E has been as high as 15.66 and as low as 11.65, with a median of 13.51.
Investors will also notice that TEF has a PEG ratio of 0.76. 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. TEF's PEG compares to its industry's average PEG of 1.59. Over the past 52 weeks, TEF's PEG has been as high as 0.76 and as low as 0.71, with a median of 0.75.
Value investors also use the P/S ratio. The P/S ratio is 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 0.69. This compares to its industry's average P/S of 1.25.
These are just a handful of the figures considered in Telefonica's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that TEF is an impressive value stock right now.
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Telefonica SA (TEF): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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