A strong performer from today's afternoon trading session is Vodafone, whose shares rose 3.21% to $12.05 per share. For those of you thinking about investing in the stock, here is a brief value analysis of the stock using the company's basic fundamental ratios.
Vodafone Group Plc is engaged in telecommunications services in Europe and internationally. The company belongs to the Technology sector, which has an average price to earnings (P/E) ratio of 27.16 and an average price to book (P/B) ratio of 6.23. In contrast, Vodafone has a trailing 12 month P/E ratio of 15.66 and a P/B ratio of 0.499.
When we divideVodafone's P/E ratio by its expected five-year EPS growth rate, we obtain a PEG ratio of 0.606, which indicates that the market is undervaluing the company's projected growth (a PEG ratio of 1 indicates a fairly valued company). Your analysis of the stock shouldn't end here. Rather, a good PEG ratio should alert you that it may be worthwhile to take a closer look at the stock.