Investors interested in stocks from the Wireless National sector have probably already heard of T-Mobile (TMUS) and I.D. Systems (IDSY). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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.
T-Mobile and I.D. Systems are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that TMUS has an improving earnings outlook. But this is just one factor that value investors are interested in.
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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
TMUS currently has a forward P/E ratio of 19.04, while IDSY has a forward P/E of 40.32. We also note that TMUS has a PEG ratio of 1.27. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. IDSY currently has a PEG ratio of 1.34.
Another notable valuation metric for TMUS is its P/B ratio of 2.52. 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, IDSY has a P/B of 3.09.
These are just a few of the metrics contributing to TMUS's Value grade of B and IDSY's Value grade of D.
TMUS is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that TMUS is likely the superior value option right now.
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T-Mobile US, Inc. (TMUS) : Free Stock Analysis Report
I.D. Systems, Inc. (IDSY) : Free Stock Analysis Report
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