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Are Investors Undervaluing Deutsche Telekom (DTEGY) Right Now?

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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, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. 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.

Deutsche Telekom (DTEGY - Free Report) is a stock many investors are watching right now. DTEGY is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.

Investors should also note that DTEGY holds a PEG ratio of 1.56. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. DTEGY's industry has an average PEG of 1.60 right now. DTEGY's PEG has been as high as 13.46 and as low as 1.25, with a median of 1.33, all within the past year.

We should also highlight that DTEGY has a P/B ratio of 1.54. 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. DTEGY's current P/B looks attractive when compared to its industry's average P/B of 1.79. Over the past year, DTEGY's P/B has been as high as 1.66 and as low as 1.32, with a median of 1.52.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. DTEGY has a P/S ratio of 0.87. This compares to its industry's average P/S of 0.94.

Finally, investors will want to recognize that DTEGY has a P/CF ratio of 4.46. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. DTEGY's P/CF compares to its industry's average P/CF of 10.61. DTEGY's P/CF has been as high as 4.80 and as low as 3.36, with a median of 3.85, all within the past year.

Value investors will likely look at more than just these metrics, but the above data helps show that Deutsche Telekom is likely undervalued currently. And when considering the strength of its earnings outlook, DTEGY sticks out at as one of the market's strongest value stocks.


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