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TLK vs. SCMWY: Which Stock Is the Better Value Option?

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Investors interested in stocks from the Diversified Communication Services sector have probably already heard of PT Telekomunikasi (TLK - Free Report) and Swisscom AG (SCMWY - 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, PT Telekomunikasi has a Zacks Rank of #2 (Buy), while Swisscom AG has a Zacks Rank of #5 (Strong Sell). Investors should feel comfortable knowing that TLK likely has seen a stronger improvement to its earnings outlook than SCMWY has recently. But this is just one piece of the puzzle for value investors.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.

TLK currently has a forward P/E ratio of 15.01, while SCMWY has a forward P/E of 16.60. We also note that TLK has a PEG ratio of 1.21. 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. SCMWY currently has a PEG ratio of 7.

Another notable valuation metric for TLK is its P/B ratio of 2.43. 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, SCMWY has a P/B of 23.63.

These metrics, and several others, help TLK earn a Value grade of B, while SCMWY has been given a Value grade of F.

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


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PT Telekomunikasi Indonesia, Tbk (TLK) - free report >>

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