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TU vs. CHT: Which Stock Is the Better Value Option?

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Investors looking for stocks in the Diversified Communication Services sector might want to consider either Telus (TU - Free Report) or Chunghwa (CHT - 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.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Telus has a Zacks Rank of #2 (Buy), while Chunghwa has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that TU likely has seen a stronger improvement to its earnings outlook than CHT has recently. But this is only part of the picture 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.

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.

TU currently has a forward P/E ratio of 18.73, while CHT has a forward P/E of 26.20. We also note that TU has a PEG ratio of 3.26. 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. CHT currently has a PEG ratio of 18.58.

Another notable valuation metric for TU is its P/B ratio of 2.21. 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, CHT has a P/B of 2.22.

Based on these metrics and many more, TU holds a Value grade of B, while CHT has a Value grade of D.

TU sticks out from CHT in both our Zacks Rank and Style Scores models, so value investors will likely feel that TU is the better option right now.


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