Should Value Investors Buy China Mobile (CHL) Stock?

Zacks Equity Research

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

China Mobile (CHL) is a stock many investors are watching right now. CHL is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 9.32, which compares to its industry's average of 12.13. Over the past year, CHL's Forward P/E has been as high as 11.45 and as low as 7.83, with a median of 10.35.

Investors should also recognize that CHL has a 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. This stock's P/B looks attractive against its industry's average P/B of 2.23. Over the past 12 months, CHL's P/B has been as high as 1.18 and as low as 0.80, with a median of 1.06.

These figures are just a handful of the metrics value investors tend to look at, but they help show that China Mobile is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, CHL feels like a great value stock at the moment.


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