KT vs. CRNT: Which Stock Is the Better Value Option?
Investors interested in stocks from the Wireless Non-US sector have probably already heard of KT Corp. (KT) and Ceragon Networks (CRNT). 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.
Right now, both KT Corp. and Ceragon Networks are sporting a Zacks Rank of # 2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is only part of the picture for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.
KT currently has a forward P/E ratio of 9.50, while CRNT has a forward P/E of 21. We also note that KT has a PEG ratio of 0.67. 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. CRNT currently has a PEG ratio of 1.40.
Another notable valuation metric for KT is its P/B ratio of 0.50. 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, CRNT has a P/B of 2.59.
Based on these metrics and many more, KT holds a Value grade of A, while CRNT has a Value grade of C.
Both KT and CRNT are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that KT is the superior value option right now.
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