Investors with an interest in Wireless National stocks have likely encountered both T-Mobile (TMUS) and I.D. Systems . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
T-Mobile has a Zacks Rank of #2 (Buy), while I.D. Systems has a Zacks Rank of #3 (Hold) right now. This means that TMUS's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
TMUS currently has a forward P/E ratio of 19.51, while IDSY has a forward P/E of 49.82. We also note that TMUS has a PEG ratio of 1.58. 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. IDSY currently has a PEG ratio of 1.66.
Another notable valuation metric for TMUS is its P/B ratio of 2.48. 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. For comparison, IDSY has a P/B of 3.58.
These metrics, and several others, help TMUS earn a Value grade of B, while IDSY has been given a Value grade of F.
TMUS stands above IDSY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that TMUS is the superior value option right now.