Investors looking for stocks in the Diversified Communication Services sector might want to consider either Telefonica Brasil (VIV) or BCE (BCE). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Telefonica Brasil is sporting a Zacks Rank of #2 (Buy), while BCE has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that VIV likely has seen a stronger improvement to its earnings outlook than BCE has recently. 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.
VIV currently has a forward P/E ratio of 15.41, while BCE has a forward P/E of 18. We also note that VIV has a PEG ratio of 1.55. 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 5.14.
Another notable valuation metric for VIV is its P/B ratio of 1.23. 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. For comparison, BCE has a P/B of 3.54.
These are just a few of the metrics contributing to VIV's Value grade of A and BCE's Value grade of C.
VIV sticks out from BCE in both our Zacks Rank and Style Scores models, so value investors will likely feel that VIV is the better option right now.
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Telefonica Brasil S.A. (VIV) : Free Stock Analysis Report
BCE, Inc. (BCE) : Free Stock Analysis Report
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