Is Telefonica Stock Undervalued Right Now?

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company value investors might notice is Telefonica TEF. TEF is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock is trading with a P/E ratio of 12.68, which compares to its industry's average of 16.68. Over the last 12 months, TEF's Forward P/E has been as high as 14.44 and as low as 10.61, with a median of 12.83.

Another notable valuation metric for TEF is its P/B ratio of 0.84. 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. This stock's P/B looks solid versus its industry's average P/B of 2.06. TEF's P/B has been as high as 0.93 and as low as 0.62, with a median of 0.76, over the past year.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. TEF has a P/S ratio of 0.57. This compares to its industry's average P/S of 1.07.

Vivendi VIVHY may be another strong Diversified Communication Services stock to add to your shortlist. VIVHY is a # 2 (Buy) stock with a Value grade of A.

Vivendi is trading at a forward earnings multiple of 11.91 at the moment, with a PEG ratio of 0.92. This compares to its industry's average P/E of 16.68 and average PEG ratio of 1.59.

Over the last 12 months, VIVHY's P/E has been as high as 16.77, as low as 9.36, with a median of 10.91, and its PEG ratio has been as high as 0.96, as low as 0.80, with a median of 0.87.

Vivendi also has a P/B ratio of 0.65 compared to its industry's price-to-book ratio of 2.06. Over the past year, its P/B ratio has been as high as 0.65, as low as 0.45, with a median of 0.57.

Value investors will likely look at more than just these metrics, but the above data helps show that Telefonica and Vivendi are likely undervalued currently. And when considering the strength of its earnings outlook, TEF and VIVHY sticks out as one of the market's strongest value stocks.

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