Back to top

Image: Bigstock

T vs. IDSY: Which Stock Is the Better Value Option?

Read MoreHide Full Article

Investors looking for stocks in the Wireless National sector might want to consider either AT&T (T - Free Report) or I.D. Systems . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

AT&T and I.D. Systems are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that T has an improving earnings 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.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

T currently has a forward P/E ratio of 9.16, while IDSY has a forward P/E of 82.50. We also note that T has a PEG ratio of 2.67. 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. IDSY currently has a PEG ratio of 2.75.

Another notable valuation metric for T is its P/B ratio of 1.32. 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. By comparison, IDSY has a P/B of 3.63.

These are just a few of the metrics contributing to T's Value grade of A and IDSY's Value grade of D.

T has seen stronger estimate revision activity and sports more attractive valuation metrics than IDSY, so it seems like value investors will conclude that T is the superior option right now.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


AT&T Inc. (T) - free report >>