Investors with an interest in Diversified Communication Services stocks have likely encountered both Telecom Italia (TIIAY) and Swisscom AG (SCMWY). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Telecom Italia has a Zacks Rank of #2 (Buy), while Swisscom AG has a Zacks Rank of #4 (Sell). This means that TIIAY's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
TIIAY currently has a forward P/E ratio of 22.90, while SCMWY has a forward P/E of 25.68. We also note that TIIAY has a PEG ratio of 0.45. 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. SCMWY currently has a PEG ratio of 2.00.
Another notable valuation metric for TIIAY is its P/B ratio of 1.07. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, SCMWY has a P/B of 29.22.
These are just a few of the metrics contributing to TIIAY's Value grade of B and SCMWY's Value grade of F.
TIIAY sticks out from SCMWY in both our Zacks Rank and Style Scores models, so value investors will likely feel that TIIAY is the better option right now.
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Telecom Italia S.P.A. (TIIAY) : Free Stock Analysis Report
Swisscom AG (SCMWY) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
