Investors interested in stocks from the Diversified Communication Services sector have probably already heard of VEON Ltd. (VEON) and BCE (BCE). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Right now, VEON Ltd. is sporting a Zacks Rank of #2 (Buy), while BCE has a Zacks Rank of #4 (Sell). This means that VEON's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
VEON currently has a forward P/E ratio of 7.55, while BCE has a forward P/E of 16.61. We also note that VEON has a PEG ratio of 0.28. 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. BCE currently has a PEG ratio of 4.06.
Another notable valuation metric for VEON is its P/B ratio of 2.17. 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. By comparison, BCE has a P/B of 3.27.
These are just a few of the metrics contributing to VEON's Value grade of A and BCE's Value grade of C.
VEON stands above BCE thanks to its solid earnings outlook, and based on these valuation figures, we also feel that VEON is the superior value option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
VEON Ltd. (VEON) : Free Stock Analysis Report
BCE, Inc. (BCE) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research