Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Telekom Austria Aktiengesellschaft stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Telekom Austria has a trailing twelve months PE ratio of 13.7, as you can see in the chart below:
![](https://staticx-tuner.zacks.com/images/zadmin_tuner_image/tkagy_pe_20180110.jpg)
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 22. If we focus on the long-term PE trend, Telekom Austria’s current PE level puts it above its midpoint over the past five years.
![](https://staticx-tuner.zacks.com/images/zadmin_tuner_image/tkagy_pevssnp_20180110.jpg)
However, the stock’s PE also compares unfavorably with the Zacks Diversified Communication Services industry’s trailing twelve months PE ratio, which stands at 11.1. At the very least, this indicates that the stock is relatively overvalued right now, compared to its peers.
![](https://staticx-tuner.zacks.com/images/zadmin_tuner_image/tkagy_pevssubin_20180110.jpg)
We should also point out that Telekom Austria has a forward PE ratio (price relative to this year’s earnings) of just 12.2, so it is fair to say that a slightly more value-oriented path may be ahead for Telekom Austria stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Telekom Austria has a P/S ratio of about 1.3. This is lower than the S&P 500 average, which comes in at 3.5x right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years, suggesting some level of undervalued trading—at least compared to historical norms.
![](https://staticx-tuner.zacks.com/images/zadmin_tuner_image/tkagy_psvssnp_20180110.jpg)
Broad Value Outlook
In aggregate, Telekom Austria currently has a Value Score of A, putting it into the top 20% of all stocks we cover from this look. This makes Telekom Austria a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, its P/CF ratio (another great indicator of value) comes in at 4.7, which is far better than the industry average of 7.6. Clearly, TKAGY is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Telekom Austria might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth Score of A and a Momentum Score of B. This gives TKAGY a Zacks VGM score — or its overarching fundamental grade — of A. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been pretty discouraging. The current year consensus estimate has inched lower by 3.4% over past two months. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Telekom Austria AG Price and Consensus
This bearish trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
Bottom Line
Telekom Austria is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a sluggish industry rank (Bottom 29% out of more than 250 industries) and a Zacks Rank #3, it is hard to get too excited about this company overall. In fact, over the past two years, the industry has clearly underperformed the broader market, as you can see below:
![](https://staticx-tuner.zacks.com/images/zadmin_tuner_image/viv_bottomline_20180110(1).jpg)
So, value investors might want to wait for estimates, analyst sentiment and broader factors to turn around in this name first, but once that happens, this stock could be a compelling pick.
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Image: Bigstock
Is Telekom Austria (TKAGY) a Great Stock for Value Investors?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Telekom Austria Aktiengesellschaft stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Telekom Austria has a trailing twelve months PE ratio of 13.7, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 22. If we focus on the long-term PE trend, Telekom Austria’s current PE level puts it above its midpoint over the past five years.
However, the stock’s PE also compares unfavorably with the Zacks Diversified Communication Services industry’s trailing twelve months PE ratio, which stands at 11.1. At the very least, this indicates that the stock is relatively overvalued right now, compared to its peers.
We should also point out that Telekom Austria has a forward PE ratio (price relative to this year’s earnings) of just 12.2, so it is fair to say that a slightly more value-oriented path may be ahead for Telekom Austria stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Telekom Austria has a P/S ratio of about 1.3. This is lower than the S&P 500 average, which comes in at 3.5x right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years, suggesting some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Telekom Austria currently has a Value Score of A, putting it into the top 20% of all stocks we cover from this look. This makes Telekom Austria a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, its P/CF ratio (another great indicator of value) comes in at 4.7, which is far better than the industry average of 7.6. Clearly, TKAGY is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Telekom Austria might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth Score of A and a Momentum Score of B. This gives TKAGY a Zacks VGM score — or its overarching fundamental grade — of A. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been pretty discouraging. The current year consensus estimate has inched lower by 3.4% over past two months. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Telekom Austria AG Price and Consensus
Telekom Austria AG Price and Consensus | Telekom Austria AG Quote
This bearish trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
Bottom Line
Telekom Austria is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a sluggish industry rank (Bottom 29% out of more than 250 industries) and a Zacks Rank #3, it is hard to get too excited about this company overall. In fact, over the past two years, the industry has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates, analyst sentiment and broader factors to turn around in this name first, but once that happens, this stock could be a compelling pick.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>