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DTEGY vs. TLSYY: Which Stock Is the Better Value Option?

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Investors looking for stocks in the Diversified Communication Services sector might want to consider either Deutsche Telekom AG (DTEGY - Free Report) or Telstra Corp. (TLSYY - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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 #2 (Buy), while Telstra Corp. has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that DTEGY is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

DTEGY currently has a forward P/E ratio of 14.17, while TLSYY has a forward P/E of 26. We also note that DTEGY has a PEG ratio of 3.99. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. TLSYY currently has a PEG ratio of 7.03.

Another notable valuation metric for DTEGY is its P/B ratio of 1.03. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, TLSYY has a P/B of 2.89.

These metrics, and several others, help DTEGY earn a Value grade of A, while TLSYY has been given a Value grade of C.

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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