TMUS or IDSY: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Wireless National sector have probably already heard of T-Mobile (TMUS) and I.D. Systems (IDSY). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, T-Mobile is sporting a Zacks Rank of #2 (Buy), while I.D. Systems has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that TMUS likely has seen a stronger improvement to its earnings outlook than IDSY has recently. However, value investors will care about much more than just this.
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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
TMUS currently has a forward P/E ratio of 18.67, while IDSY has a forward P/E of 43.76. We also note that TMUS has a PEG ratio of 1.43. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. IDSY currently has a PEG ratio of 1.46.
Another notable valuation metric for TMUS is its P/B ratio of 2.46. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, IDSY has a P/B of 3.35.
Based on these metrics and many more, TMUS holds a Value grade of B, while IDSY has a Value grade of D.
TMUS sticks out from IDSY in both our Zacks Rank and Style Scores models, so value investors will likely feel that TMUS is the better option right now.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.