Meanwhile, CenturyLink has a forward PE ratio (price relative to this year’s earnings) of 9.56, which slightly higher than the current level. So, so it is fair to expect an increase in share price in the near term too.
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, CenturyLink has a P/S ratio of just 0.59. This is quite lower than the S&P 500 average, which comes in at 3.24x right now. Also, as we can see in the chart below, this is much below the highs for this stock in particular over the past few years.
Broad Value Outlook
In aggregate, CenturyLink currently has a Value Score of A, putting it into the top 20% of all stocks we cover from this look. This makes CenturyLink a solid choice for value investors and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for CenturyLink is just 0.9, a level that is far lower than the industry average of 2.35. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate.
What About the Stock Overall?
In particular, it is worth noting that the company has a Growth Score of A and a Momentum Score of F. This gives CTL a Zacks VGM score — or its overarching fundamental grade — of A. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. The current quarter has seen three estimates go down in the past sixty days compared to two upward revisions, while the current year estimate has seen four down and three up in the same time period.
This has had a mixed effect on the consensus estimate. While the current-quarter consensus estimate has dipped 8.6% over the past two months, the current-year estimate has remained stable. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Such mixed analyst sentiments is the reason why the stock has a Zacks Rank #3 (Hold) and why we are looking for in line performance from the company in the near term.
CenturyLink is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Despite a strong industry rank (among Top 28% of more than 250 industries), with a Zacks Rank #3 it is hard to get too excited about the stock.
Also, over the past two years, the broader industry has clearly underperformed the market at large, as you can see below:
So, value investors might want to wait for Zacks rank and analyst sentiments to turn around in this name first, but once that happens, this stock could be a compelling pick.
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