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Are Investors Undervaluing Telephone & Data Systems (TDS) Right Now?

Idexx (IDXX) has an impressive earnings surprise history and currently possesses the right combination of the two key ingredients for a likely beat in its next quarterly report.

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

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.

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). TDS is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A.

Investors should also recognize that TDS has a P/B ratio of 0.75. 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. TDS's current P/B looks attractive when compared to its industry's average P/B of 0.75. TDS's P/B has been as high as 0.76 and as low as 0.52, with a median of 0.63, over the past year.

Finally, investors will want to recognize that TDS has a P/CF ratio of 3.10. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 3.13. Within the past 12 months, TDS's P/CF has been as high as 3.24 and as low as 2.09, with a median of 2.52.

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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