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Investors interested in Diversified Communication Services stocks are likely familiar with 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.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Deutsche Telekom AG has a Zacks Rank of #1 (Strong Buy), while Chunghwa 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 are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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 14.55, while CHT has a forward P/E of 25.61. We also note that DTEGY has a PEG ratio of 1.16. 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. CHT currently has a PEG ratio of 20.33.
Another notable valuation metric for DTEGY is its P/B ratio of 1.51. 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 2.52.
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