TSU or DCMYY: Which Is the Better Value Stock Right Now?
Zacks August 15, 2018
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Investors looking for stocks in the Wireless Non-US sector might want to consider either TIM Participacoes S.A. (TSU) or NTT Docomo (DCMYY). But which of these two companies is the best option for those looking for undervalued stocks? 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 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.
TIM Participacoes S.A. and NTT Docomo are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. This means that TSU's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle 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.
TSU currently has a forward P/E ratio of 14.55, while DCMYY has a forward P/E of 15.40. We also note that TSU has a PEG ratio of 0.62. 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. DCMYY currently has a PEG ratio of 3.96.
Another notable valuation metric for TSU 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, DCMYY has a P/B of 1.89.
These metrics, and several others, help TSU earn a Value grade of A, while DCMYY has been given a Value grade of C.
TSU stands above DCMYY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that TSU is the superior value option right now.
TIM Participacoes S.A. (TSU) : Free Stock Analysis Report
NTT DOCOMO, Inc (DCMYY) : Free Stock Analysis Report
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