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Are Investors Undervaluing SK Telecom (SKM) Right Now?

Zacks Equity Research
·3 min read

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.

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.

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 to watch right now is SK Telecom (SKM). SKM is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 11.15 right now. For comparison, its industry sports an average P/E of 12.09. Over the last 12 months, SKM's Forward P/E has been as high as 14.53 and as low as 7.45, with a median of 10.95.

We should also highlight that SKM has a P/B ratio of 0.76. 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 company's current P/B looks solid when compared to its industry's average P/B of 2.23. SKM's P/B has been as high as 0.85 and as low as 0.51, with a median of 0.77, over the past year.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. SKM has a P/S ratio of 0.88. This compares to its industry's average P/S of 1.1.

Finally, we should also recognize that SKM has a P/CF ratio of 4.94. 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. SKM's P/CF compares to its industry's average P/CF of 6.77. Over the past 52 weeks, SKM's P/CF has been as high as 6.08 and as low as 3.72, with a median of 5.48.

Value investors will likely look at more than just these metrics, but the above data helps show that SK Telecom is likely undervalued currently. And when considering the strength of its earnings outlook, SKM sticks out at as one of the market's strongest value stocks.


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Zacks Investment Research