HAYW or GRMN: Which Is the Better Value Stock Right Now?

Investors with an interest in Electronics - Miscellaneous Products stocks have likely encountered both Hayward Holdings, Inc. (HAYW) and Garmin (GRMN). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, Hayward Holdings, Inc. has a Zacks Rank of #2 (Buy), while Garmin has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that HAYW likely has seen a stronger improvement to its earnings outlook than GRMN has recently. But this is just one factor that value investors are interested in.

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.

HAYW currently has a forward P/E ratio of 22.10, while GRMN has a forward P/E of 29.69. We also note that HAYW has a PEG ratio of 2.32. 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. GRMN currently has a PEG ratio of 2.66.

Another notable valuation metric for HAYW is its P/B ratio of 2.34. 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, GRMN has a P/B of 5.67.

These are just a few of the metrics contributing to HAYW's Value grade of B and GRMN's Value grade of D.

HAYW has seen stronger estimate revision activity and sports more attractive valuation metrics than GRMN, so it seems like value investors will conclude that HAYW is the superior option right now.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research