Investors with an interest in Wireless Non-US stocks have likely encountered both Orange (ORAN - Free Report) and NTT Docomo (DCMYY - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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, Orange has a Zacks Rank of #2 (Buy), while NTT Docomo has a Zacks Rank of #3 (Hold). This means that ORAN's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture 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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
ORAN currently has a forward P/E ratio of 13.09, while DCMYY has a forward P/E of 14.69. We also note that ORAN has a PEG ratio of 0.51. 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. DCMYY currently has a PEG ratio of 3.78.
Another notable valuation metric for ORAN is its P/B ratio of 1.11. 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, DCMYY has a P/B of 1.80.
These metrics, and several others, help ORAN earn a Value grade of A, while DCMYY has been given a Value grade of C.
ORAN 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 ORAN is likely the superior value option right now.