TMUS Or IDSY: Which Is The Better Value Stock Right Now?
Zacks Investment Research | May 05, 2019 09:30PM ET
Investors with an interest in Wireless National stocks have likely encountered both T-Mobile (TMUS) and I.D. Systems (IDSY). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
T-Mobile and I.D. Systems are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. This means that TMUS'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.
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 18.44, while IDSY has a forward P/E of 52.64. We also note that TMUS has a PEG ratio of 1.23. 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. IDSY currently has a PEG ratio of 1.75.
Another notable valuation metric for TMUS is its P/B ratio of 2.44. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, IDSY has a P/B of 3.33.
Based on these metrics and many more, TMUS holds a Value grade of A, while IDSY has a Value grade of D.
TMUS stands above IDSY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that TMUS is the superior value option right now.
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