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CHL or DCMYY: Which Is the Better Value Stock Right Now?


Investors interested in stocks from the Wireless Non-US sector have probably already heard of China Mobile (CHL) and NTT Docomo (DCMYY). 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

China Mobile and NTT Docomo are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that CHL has an improving earnings outlook. But this is only part of the picture for value investors.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

CHL currently has a forward P/E ratio of 11.99, while DCMYY has a forward P/E of 15.16. We also note that CHL has a PEG ratio of 2.94. 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. DCMYY currently has a PEG ratio of 3.90.

Another notable valuation metric for CHL is its P/B ratio of 1.27. The P/B ratio is used to compare a stock’s market value with its book value, which is defined as total assets minus total liabilities. For comparison, DCMYY has a P/B of 1.83.

These are just a few of the metrics contributing to CHL’s Value grade of B and DCMYY’s Value grade of C.

CHL stands above DCMYY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that CHL is the superior value option right now.

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