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Should Value Investors Buy Telephone & Data Systems (TDS) Stock?

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While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. 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.

One company to watch right now is Telephone & Data Systems (TDS - Free Report) . TDS is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 19.46, which compares to its industry's average of 26.23. TDS's Forward P/E has been as high as 29.25 and as low as 13.61, with a median of 23.12, all within the past year.

Another valuation metric that we should highlight is TDS's P/B ratio of 0.41. 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. This stock's P/B looks solid versus its industry's average P/B of 0.53. Within the past 52 weeks, TDS's P/B has been as high as 0.71 and as low as 0.32, with a median of 0.52.

Finally, investors should note that TDS has a P/CF ratio of 2.11. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. TDS's current P/CF looks attractive when compared to its industry's average P/CF of 2.77. Over the past 52 weeks, TDS's P/CF has been as high as 3.67 and as low as 1.68, with a median of 2.68.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Telephone & Data Systems is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, TDS feels like a great value stock at the moment.


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