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Investors with an interest in Diversified Communication Services stocks have likely encountered both Deutsche Telekom AG (DTEGY) and Chunghwa (CHT). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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.
Deutsche Telekom AG has a Zacks Rank of #2 (Buy), while Chunghwa has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that DTEGY has an improving earnings outlook. But this is only part of the picture for value investors.
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 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.
DTEGY currently has a forward P/E ratio of 15.89, while CHT has a forward P/E of 25.42. We also note that DTEGY has a PEG ratio of 1.27. 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 18.29.
Another notable valuation metric for DTEGY is its P/B ratio of 1.47. 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 2.45.
These metrics, and several others, help DTEGY earn a Value grade of A, while CHT has been given a Value grade of D.
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
Chunghwa Telecom Co., Ltd. (CHT) : Free Stock Analysis Report