Back to top

Image: Bigstock

Is Deutsche Telekom (DTEGY) a Great Value Stock Right Now?

Read MoreHide Full Article

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company value investors might notice is Deutsche Telekom (DTEGY - Free Report) . DTEGY is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 13.21, while its industry has an average P/E of 16.88. Over the last 12 months, DTEGY's Forward P/E has been as high as 15.97 and as low as 11.60, with a median of 13.41.

We also note that DTEGY holds a PEG ratio of 1.27. 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. DTEGY's PEG compares to its industry's average PEG of 1.31. Over the past 52 weeks, DTEGY's PEG has been as high as 2.16 and as low as 1.03, with a median of 1.25.

Another valuation metric that we should highlight is DTEGY's P/B ratio of 0.94. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 1.78. Over the past 12 months, DTEGY's P/B has been as high as 1.14 and as low as 0.81, with a median of 0.96.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. DTEGY has a P/S ratio of 0.72. This compares to its industry's average P/S of 1.77.

Finally, investors should note that DTEGY has a P/CF ratio of 2.40. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. DTEGY's P/CF compares to its industry's average P/CF of 6.45. Over the past year, DTEGY's P/CF has been as high as 2.68 and as low as 2.17, with a median of 2.43.

Telefonica (TEF - Free Report) may be another strong Diversified Communication Services stock to add to your shortlist. TEF is a # 2 (Buy) stock with a Value grade of A.

Shares of Telefonica are currently trading at a forward earnings multiple of 14.33 and a PEG ratio of 0.90 compared to its industry's P/E and PEG ratios of 16.88 and 1.31, respectively.

TEF's price-to-earnings ratio has been as high as 19.37 and as low as 2.13, with a median of 13.88, while its PEG ratio has been as high as 1.22 and as low as 0.13, with a median of 0.91, all within the past year.

Telefonica sports a P/B ratio of 0.78 as well; this compares to its industry's price-to-book ratio of 1.78. In the past 52 weeks, TEF's P/B has been as high as 0.87, as low as 0.61, with a median of 0.73.

These are just a handful of the figures considered in Deutsche Telekom and Telefonica's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that DTEGY and TEF is an impressive value stock right now.


In-Depth Zacks Research for the Tickers Above


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


Telefonica SA (TEF) - free report >>

Deutsche Telekom AG (DTEGY) - free report >>

Published in