Investors with an interest in Satellite and Communication stocks have likely encountered both SES S.A. (SGBAF) and Iridium Communications (IRDM). 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.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, SES S.A. has a Zacks Rank of #2 (Buy), while Iridium Communications 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 SGBAF has an improving earnings outlook. But this is only part of the picture 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.
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.
SGBAF currently has a forward P/E ratio of 25.21, while IRDM has a forward P/E of 148.59. We also note that SGBAF has a PEG ratio of 12.60. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. IRDM currently has a PEG ratio of 29.72.
Another notable valuation metric for SGBAF is its P/B ratio of 0.89. 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, IRDM has a P/B of 1.09.
Based on these metrics and many more, SGBAF holds a Value grade of A, while IRDM has a Value grade of C.
SGBAF stands above IRDM thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SGBAF is the superior value option right now.