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Is CenturyLink (CTL) a Great Value Stock Right Now?

Zacks Equity Research

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company value investors might notice is CenturyLink (CTL). CTL 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 8.61, which compares to its industry's average of 11.88. Over the past 52 weeks, CTL's Forward P/E has been as high as 21.88 and as low as 7.31, with a median of 13.56.

Investors will also notice that CTL has a PEG ratio of 0.99. 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. CTL's PEG compares to its industry's average PEG of 1.37. Over the last 12 months, CTL's PEG has been as high as 3.18 and as low as -14.58, with a median of -9.04.

We should also highlight that CTL has a P/B ratio of 0.95. 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. This stock's P/B looks attractive against its industry's average P/B of 1.63. CTL's P/B has been as high as 1.13 and as low as 0.63, with a median of 0.89, over the past year.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. CTL has a P/S ratio of 0.55. This compares to its industry's average P/S of 1.41.

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


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