Investors with an interest in Wireless Equipment stocks have likely encountered both Comtech Telecommunications (CMTL) and Qualcomm (QCOM). 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.
Currently, Comtech Telecommunications has a Zacks Rank of #2 (Buy), while Qualcomm has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that CMTL has an improving earnings outlook. But this is just one factor that value investors are interested in.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
CMTL currently has a forward P/E ratio of 7.75, while QCOM has a forward P/E of 15.93. We also note that CMTL has a PEG ratio of 0.97. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. QCOM currently has a PEG ratio of 1.40.
Another notable valuation metric for CMTL is its P/B ratio of 0.30. 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, QCOM has a P/B of 7.86.
Based on these metrics and many more, CMTL holds a Value grade of B, while QCOM has a Value grade of C.
CMTL has seen stronger estimate revision activity and sports more attractive valuation metrics than QCOM, so it seems like value investors will conclude that CMTL is the superior option right now.
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See This Stock Now for Free >>Comtech Telecommunications Corp. (CMTL) : Free Stock Analysis Report
QUALCOMM Incorporated (QCOM) : Free Stock Analysis Report
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