Should Value Investors Buy China Telecom (CHA) Stock?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One company to watch right now is China Telecom (CHA). CHA is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 7.67. This compares to its industry's average Forward P/E of 9.59. CHA's Forward P/E has been as high as 11.39 and as low as 6.42, with a median of 8.75, all within the past year.
CHA is also sporting a PEG ratio of 1.38. 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. CHA's industry has an average PEG of 1.80 right now. Over the last 12 months, CHA's PEG has been as high as 1.74 and as low as 1.03, with a median of 1.38.
Value investors will likely look at more than just these metrics, but the above data helps show that China Telecom is likely undervalued currently. And when considering the strength of its earnings outlook, CHA sticks out at as one of the market's strongest value stocks.
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