Investors interested in Diversified Communication Services stocks are likely familiar with Telefonica (MC:TEF) Brasil (VIV) and BCE (BCE). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.
Telefonica Brasil has a Zacks Rank of #1 (Strong Buy), while BCE has a Zacks Rank of #3 (Hold) right now. This means that VIV's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
VIV currently has a forward P/E ratio of 13.45, while BCE has a forward P/E of 15.28. We also note that VIV has a PEG ratio of 1.30. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. BCE currently has a PEG ratio of 4.37.
Another notable valuation metric for VIV is its P/B ratio of 1.13. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, BCE has a P/B of 2.86.
Based on these metrics and many more, VIV holds a Value grade of B, while BCE has a Value grade of C.
VIV stands above BCE thanks to its solid earnings outlook, and based on these valuation figures, we also feel that VIV is the superior value option right now.
Telefonica Brasil S.A. (VIV): Free Stock Analysis Report
BCE, Inc. (BCE): Free Stock Analysis Report
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