Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?

One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Turkcell Iletisim Hizmetleri A.S. (TKC Quick QuoteTKC - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:

PE Ratio

A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.

On this front, Turkcell Iletisim has a trailing twelve months PE ratio of 10.75, as you can see in the chart below:



This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 20.30. If we focus on the long-term PE trend, Turkcell Iletisim’s current PE level puts it slightly below its midpoint of 11.07 over the past five years. Moreover, the current level stands below the recent highs for the stock, suggesting that it could be a solid entry point.



Further, the stock’s PE also compares favorably with the Zacks classified Computer & Technology sector’s trailing twelve months PE ratio, which stands at 21.86. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
 


We should also point out that Turkcell Iletisim has a forward PE ratio (price relative to this year’s earnings) of 12.67, so it is fair to expect an increase in the company’s share price in the near future.

P/S Ratio

Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.

Right now, Turkcell Iletisim has a P/S ratio of about 1.52. This is quite lower than the S&P 500 average, which comes in at 3.08 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.



If anything, TKC is in the lower end of its range in the time period from a P/S metric, suggesting some level of undervalued trading—at least compared to historical norms.

Broad Value Outlook

In aggregate, Turkcell Iletisim currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Turkcell Iletisim a solid choice for value investors, and some of its other key metrics make this pretty clear too.

For example, the PEG ratio for Turkcell Iletisim is just 0.78, a level that is slightly lower than the industry average of 0.97. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate.

What About the Stock Overall?

Though Turkcell Iletisim might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade and Momentum score of ‘F’, each. This gives TKC a Zacks VGM score—or its overarching fundamental grade—of ‘F’. (You can read more about the Zacks Style Scores here >>)

Nevertheless, the company’s recent earnings estimates have been somewhat encouraging, as the full year estimate has seen one upward revision with no downward revisions in the last sixty days. This has had a positive impact on the consensus estimate, as the full year estimate has increased 8.5% over the last two months. You can see the consensus estimate trend and recent price action for the stock in the chart below:

This somewhat bullish trend is why the stock boasts a Zacks Rank #2 (Buy) and why we are looking for outperformance from the company in the near term.

Bottom Line

Turkcell Iletisim is an inspired choice for value investors, given its decent lineup of statistics on this front. Along with a solid Zacks Rank, the company also flaunts an impressive industry rank (Top 20% out of over 250 industries).

Though the Zacks classified Wireless Non – U.S. industry has underperformed the broader market in the last two years, the industry has been gathering momentum since the beginning of 2017, hinting at revival prospects. In fact, in the last one month, the Zacks classified Wireless Non – U.S. industry has outperformed the broader market, which is reflected in the chart below:



So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.

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