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VIV vs. BCE: Which Stock Should Value Investors Buy Now?
Investors interested in Diversified Communication Services stocks are likely familiar with Telefonica Brasil (VIV - Free Report) and BCE (BCE - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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.
Currently, Telefonica Brasil has a Zacks Rank of #2 (Buy), while BCE has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that VIV likely has seen a stronger improvement to its earnings outlook than BCE has recently. However, value investors will care about much more than just this.
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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
VIV currently has a forward P/E ratio of 15.96, while BCE has a forward P/E of 20.14. We also note that VIV has a PEG ratio of 3.44. 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. BCE currently has a PEG ratio of 5.99.
Another notable valuation metric for VIV is its P/B ratio of 1.03. 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, BCE has a P/B of 3.04.
These are just a few of the metrics contributing to VIV's Value grade of A and BCE's Value grade of C.
VIV 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 VIV is likely the superior value option right now.