5 Undervalued Telecommunications Services - Integrated Stocks for Friday, July 05 (2024)

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 5 undervalued stocks in the Telecommunications Services - Integrated industry for Friday, July 05, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Telecommunications Services - Integrated industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Cable One, Inc. is a broadband communications provider. The Company provides residential customers with an array of connectivity and entertainment services, including Gigabit speeds, advanced wireless fidelity (Wi-Fi), and video. It provides services that are similar to those provided by cable companies, telephone companies and fiber providers, among others. Its three primary product lines include residential data, residential video and business services. Its broadband plant generally consists of a fiber-to-the-premises or hybrid fiber-coaxial (HFC) network with ample unused capacity. It offers Sparklight TV, an Internet protocol-based (IPTV) video service that allows customers with its Sparklight TV app to stream its video channels from the cloud. Its customers are located in seven states: Arizona, Idaho, Mississippi, Missouri, Oklahoma, South Carolina and Texas. It provides services to more than 1.1 million residential and business customers out of approximately 2.8 million homes.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Cable One Inc has a Value Score of 91, which is considered to be undervalued.

When you look at Cable One Inc’s price-to-sales ratio at 1.18 compared to the industry median at 1.12, this company has a higher price relative to revenue compared to its peers. This could make Cable One Inc’s stock less attractive for value investors.

Cable One Inc’s price-earnings ratio is 8.01 compared to the industry median at 15.95. This means it has a lower share price relative to earnings compared to its peers. This could make Cable One Inc more attractive for value investors.

Now, let’s assess Cable One Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 6.6, when compared to the industry median of 7.0, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Cable One Inc’s shareholder yield is higher than its industry median ratio of 3.58%. Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Cable One Inc’s price-to-book ratio is lower than its industry median ratio of 1.87. This could make Cable One Inc more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Cable One Inc’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Cable One Inc’s price-to-free-cash-flow ratio is lower than its industry median ratio of 10.76. This could make Cable One Inc more attractive because the lower P/FCF ratio indicates that Cable One Inc is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

Deutsche Telekom AG is a Germany-based company that provides information technology (IT) and telecommunications services. The Company's operating segments include Germany, consisting of fixed-network and mobile activities in Germany; United States, which consists of mobile activities in the United States market; Europe, consisting of fixed-network and mobile operations of the national companies in various European countries, such as Greece, Romania, Hungary, Poland, the Czech Republic, Croatia, Slovakia, Austria, Albania, Macedonia and Montenegro; Systems Solutions, which operates information and communication technology (ICT) systems for multinational corporations and public sector institutions; Group Development, comprising the entities T-Mobile Netherlands and Deutsche Funkturm (DFMG) and its equity investment in Stroeer SE & Co. KGaA, and Group Headquarters & Group Services, which consists of the operations of service headquarters and various other subsidiaries of the Company.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Deutsche Telekom AG (ADR) has a Value Score of 72, which is considered to be undervalued.

Deutsche Telekom AG (ADR)’s price-earnings ratio is 27.0 compared to the industry median at 15.9. This means that it has a higher price relative to its earnings compared to its peers. This makes Deutsche Telekom AG (ADR) less attractive for value investors.

Deutsche Telekom AG (ADR)’s price-to-book ratio is lower than its peers. This could make Deutsche Telekom AG (ADR) more attractive for value investors when compared to the industry median at 1.87.

You can read more about Deutsche Telekom AG (ADR)’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

KT Corp is a Korea-based company that mainly provides telecommunication services. The Company operates its business through four segments. The Information and Communications Technologies segment is engaged in providing telecommunication services to individual, home, corporate customers and the convergence business. The Finance segment is engaged in providing financial services, such as credit card. The Satellite Broadcasting segment provides satellite television services. The Other segment includes security services, satellite service, information technology and network services, as well as global business services, which provide global network services to multinational or domestic corporate customers and telecommunications companies. The Company's principal services include mobile voice and data telecommunications services; fixed-line services; credit card processing and other financial services; as well as other services. The Company is engaged in the software platforms business.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

KT Corp (ADR) has a Value Score of 99, which is considered to be undervalued.

KT Corp (ADR)’s price-earnings ratio is 8.4 compared to the industry median at 15.9. This means that it has a lower price relative to its earnings compared to its peers. This makes KT Corp (ADR) more attractive for value investors.

KT Corp (ADR)’s price-to-book ratio is higher than its peers. This could make KT Corp (ADR) less attractive for value investors when compared to the industry median at 1.87.

You can read more about KT Corp (ADR)’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

PLDT Inc. is a Philippines-based diversified telecommunication company. The Company operates through three business segments: Wireless, Fixed Line and Others. The Company, through its business segments, offers a range of telecommunications services across the Philippines' fiber optic backbone and wireless and fixed line networks. Its wireless segment provides mobile telecommunications services provided by Smart and DMPI; SBI and PDSI are its wireless broadband service provider; and mobile virtual network operations. Its fixed line segment provides telecommunications services. It also provides fixed line services through its subsidiaries, namely, ClarkTel, BCC and PLDT Global and certain subsidiaries, data center, cloud, cyber security services, managed information technology services and reseller ship, and distribution of Filipino channels. Its others segment includes PCEV, PGIH, PLDT Digital and its subsidiaries, and PGIC, an investment company.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

PLDT Inc (ADR) has a Value Score of 79, which is considered to be undervalued.

PLDT Inc (ADR)’s price-earnings ratio is 11.6 compared to the industry median at 15.9. This means that it has a lower price relative to its earnings compared to its peers. This makes PLDT Inc (ADR) more attractive for value investors.

PLDT Inc (ADR)’s price-to-book ratio is lower than its peers. This could make PLDT Inc (ADR) more attractive for value investors when compared to the industry median at 1.87.

You can read more about PLDT Inc (ADR)’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Telefonica Brasil S.A. is a mobile telecommunications company in Brazil offering postpaid mobile services. The Company also operates as a fixed telecommunications company in the state of Sao Paulo. The Company markets its mobile services under its Vivo brand. It offers its clients a portfolio of products, including mobile and fixed voice, mobile data, fixed broadband, ultra-fast broadband, Pay television, information technology and digital services. Its operations consist of local and long distance fixed telephone services; mobile services, including value-added services; data services, including broadband services and mobile data services; Pay television services through direct to home (DTH), Internet protocol television (IPTV) and cable; network services, such as rental of facilities, as well as other services; wholesale services, including interconnection; digital services; services designed specifically for corporate customers, and the sale of wireless devices and accessories.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Telefonica Brasil SA (ADR) has a Value Score of 80, which is considered to be undervalued.

Telefonica Brasil SA (ADR)’s price-earnings ratio is 15.4 compared to the industry median at 15.9. This means that it has a lower price relative to its earnings compared to its peers. This makes Telefonica Brasil SA (ADR) more attractive for value investors.

Telefonica Brasil SA (ADR)’s price-to-book ratio is higher than its peers. This could make Telefonica Brasil SA (ADR) less attractive for value investors when compared to the industry median at 1.87.

You can read more about Telefonica Brasil SA (ADR)’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Telecommunications Services - Integrated stocks as well as other industrys.

Now that you have a bit more background about each of the 5 undervalued stocks in the Telecommunications Services - Integrated industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

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