Is Telefonica (TEF) Stock Undervalued Right Now?
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 stock to keep an eye on is Telefonica (TEF). TEF is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 13.77, while its industry has an average P/E of 21.08. Over the past 52 weeks, TEF's Forward P/E has been as high as 18.53 and as low as 9.45, with a median of 12.87.
We also note that TEF holds a PEG ratio of 2.35. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. TEF's industry currently sports an average PEG of 2.54. TEF's PEG has been as high as 3.67 and as low as 0.51, with a median of 1.45, all within the past year.
Finally, our model also underscores that TEF has a P/CF ratio of 11.82. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. TEF's current P/CF looks attractive when compared to its industry's average P/CF of 18.67. Over the past year, TEF's P/CF has been as high as 15.64 and as low as 9.60, with a median of 12.32.
Another great Diversified Communication Services stock you could consider is Telefonica Brasil (VIV), which is a # 2 (Buy) stock with a Value Score of A.
Shares of Telefonica Brasil are currently trading at a forward earnings multiple of 17.87 and a PEG ratio of 1.03 compared to its industry's P/E and PEG ratios of 21.08 and 2.54, respectively.
Over the past year, VIV's P/E has been as high as 18.62, as low as 12.72, with a median of 14.52; its PEG ratio has been as high as 3.53, as low as 0.77, with a median of 1.45 during the same time period.
Telefonica Brasil sports a P/B ratio of 1.23 as well; this compares to its industry's price-to-book ratio of 2.17. In the past 52 weeks, VIV's P/B has been as high as 1.30, as low as 0.81, with a median of 1.04.
These are just a handful of the figures considered in Telefonica and Telefonica Brasil's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that TEF and VIV is an impressive value stock right now.
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Telefonica SA (TEF) : Free Stock Analysis Report
Telefonica Brasil S.A. (VIV) : Free Stock Analysis Report
