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VIV vs. SCMWY: Which Stock Is the Better Value Option?

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Investors interested in stocks from the Diversified Communication Services sector have probably already heard of Telefonica Brasil (VIV) and Swisscom AG (SCMWY). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 Swisscom AG has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that VIV is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.

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.

VIV currently has a forward P/E ratio of 17.34, while SCMWY has a forward P/E of 19.08. We also note that VIV has a PEG ratio of 1.07. 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. SCMWY currently has a PEG ratio of 8.05.

Another notable valuation metric for VIV is its P/B ratio of 1.42. 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, SCMWY has a P/B of 2.66.

These metrics, and several others, help VIV earn a Value grade of B, while SCMWY has been given a Value grade of C.

VIV sticks out from SCMWY 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
Swisscom AG (SCMWY) : Free Stock Analysis Report
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