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.
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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Orange and NTT Docomo are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that ORAN likely has seen a stronger improvement to its earnings outlook than DCMYY has recently. But this is just one factor that value investors are interested in.
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 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.
ORAN currently has a forward P/E ratio of 12.77, while DCMYY has a forward P/E of 15.40. We also note that ORAN has a PEG ratio of 0.51. 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. DCMYY currently has a PEG ratio of 3.96.
Another notable valuation metric for ORAN is its P/B ratio of 1.10. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, DCMYY has a P/B of 1.88.
Based on these metrics and many more, ORAN holds a Value grade of A, while DCMYY has 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.