Should Value Investors Buy Deutsche Telekom (DTEGY) Stock?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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 stock to keep an eye on is Deutsche Telekom (DTEGY). DTEGY is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 12.53. This compares to its industry's average Forward P/E of 15.69. Over the past 52 weeks, DTEGY's Forward P/E has been as high as 14.24 and as low as 11.47, with a median of 12.91.
Investors should also note that DTEGY holds a PEG ratio of 1.05. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. DTEGY's industry has an average PEG of 1.24 right now. Over the last 12 months, DTEGY's PEG has been as high as 1.48 and as low as 0.66, with a median of 1.17.
Another notable valuation metric for DTEGY is its P/B ratio of 0.99. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.74. Within the past 52 weeks, DTEGY's P/B has been as high as 1.02 and as low as 0.81, with a median of 0.93.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. DTEGY has a P/S ratio of 0.75. This compares to its industry's average P/S of 1.42.
Nippon Telegraph and Telephone (NTTYY) may be another strong Diversified Communication Services stock to add to your shortlist. NTTYY is a # 2 (Buy) stock with a Value grade of A.
Nippon Telegraph and Telephone is currently trading with a Forward P/E ratio of 10.73 while its PEG ratio sits at 1.62. Both of the company's metrics compare favorably to its industry's average P/E of 15.69 and average PEG ratio of 1.24.
Over the last 12 months, NTTYY's P/E has been as high as 10.90, as low as 9.73, with a median of 10.56, and its PEG ratio has been as high as 1.64, as low as 1.46, with a median of 1.59.
Additionally, Nippon Telegraph and Telephone has a P/B ratio of 1.39 while its industry's price-to-book ratio sits at 1.74. For NTTYY, this valuation metric has been as high as 1.45, as low as 1.26, with a median of 1.35 over the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that Deutsche Telekom and Nippon Telegraph and Telephone are likely undervalued currently. And when considering the strength of its earnings outlook, DTEGY and NTTYY sticks out as one of the market's strongest value stocks.
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Deutsche Telekom AG (DTEGY) : Free Stock Analysis Report
Nippon Telegraph and Telephone Corporation (NTTYY) : Free Stock Analysis Report
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