Deutsche Telekom and financial ratios

Last post, I spoke about Deutsche Telekom (DTE.DE). That's right, the stock picked up from 11,67€ to 12,54€ of last Friday. It's a good valorization (+7,4%), but in our point of view, still very cheap.
Let's see from 11,67€ to 12,54€ the ev/ebitda increased from 4,71 to 4,91. That means that a company that makes a bid for Deutsche Telekom will take worth of 5 years to pay the company with his EBITDA. :-) (if any bank finances me, I make an offer for Deutsche Telekom, I will pay my purchase in a few years...)

Now lets compares this ratio with other companies or sectors:
Deutsche Telekom AG (dte.de): quote 12,54--> ev/ebitda=4,91
France Telecom (fte.pa): quote 18,10€ ---> ev/ebitda=5,15
Portugal Telecom (ptc.ls): quote 9,85€ ---> ev/ebitda=9,10 (under Sonae's bid process)
Telecom Italia (tit.mi): quote 2,24€ ------> ev/ebitda=6,66

You maybe think that ratios are very close each other... Wrong! For Example, to Deutsche Telekom to get a ratio of Portugal Telecom (ev/ebitda=9,10) it needs to trade at 30 euros!
If France Telecom to trade as expensive as Portugal Telecom it would be trading at 46 euros! Let's say that in both cases, quotes would have to double!!!

Incredible and most of all, not understandable!

If we compare telecom sector with other sectors like energy, there we will get much more differences.

Endesa (ele.mc): quote 33,55 ----> ev/ebitda = 9,42
Iberdrola (ibe.mc): quote 35,30--> ev/ebitda = 10,80
EDP (edp.ls): quote 3,42 ---------> ev/ebitda = 9,45

But if we talk about growth stocks, like Inditex (itx.mc) (owner of Zara, Massimo Dutti...) or a Gamesa (gam.mc) wind tower generators, we get ev/ebitda=12,66 and 12 respectively.

The key for our investments is very trivial. We have to decide if we like to acquire a company cheap undervalued by the market (value investing methodology) or a company with a great potential but for the present financial data, is an expensive enterprise (growth stocks methodology). I prefer the first way to invest but we can always, spread the money along both.... :-)

Enjoy your investments!

Regards,
Filipe Vasconcelos