Investors interested in Diversified Communication Services stocks are likely familiar with Telus (TU) and BCE (BCE). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, both Telus and BCE are holding a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one factor that value investors are interested in.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
TU currently has a forward P/E ratio of 16.15, while BCE has a forward P/E of 17.16. We also note that TU has a PEG ratio of 2.02. 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. BCE currently has a PEG ratio of 4.90.
Another notable valuation metric for TU is its P/B ratio of 2.77. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, BCE has a P/B of 3.30.
These metrics, and several others, help TU earn a Value grade of B, while BCE has been given a Value grade of C.
Both TU and BCE are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that TU is the superior value option right now.
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TELUS Corporation (TU) : Free Stock Analysis Report
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