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DTEGY or SCMWY: Which Is the Better Value Stock Right Now?

Zacks Equity Research
·2-min read

Investors interested in Diversified Communication Services stocks are likely familiar with Deutsche Telekom AG (DTEGY) and Swisscom AG (SCMWY). 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Deutsche Telekom AG and Swisscom AG are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that DTEGY is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

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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.

DTEGY currently has a forward P/E ratio of 13.52, while SCMWY has a forward P/E of 17.08. We also note that DTEGY has a PEG ratio of 0.78. 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. SCMWY currently has a PEG ratio of 7.21.

Another notable valuation metric for DTEGY is its P/B ratio of 0.91. 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, SCMWY has a P/B of 24.07.

Based on these metrics and many more, DTEGY holds a Value grade of A, while SCMWY has a Value grade of F.

DTEGY stands above SCMWY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that DTEGY is the superior value option right now.


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Deutsche Telekom AG (DTEGY) : Free Stock Analysis Report
 
Swisscom AG (SCMWY) : Free Stock Analysis Report
 
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Zacks Investment Research