Investors interested in Electronics - Miscellaneous Components stocks are likely familiar with CTS (CTS) and Universal Display Corp. (OLED). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
CTS and Universal Display Corp. are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that CTS is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.
CTS currently has a forward P/E ratio of 18.78, while OLED has a forward P/E of 25.98. We also note that CTS has a PEG ratio of 1.17. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. OLED currently has a PEG ratio of 3.94.
Another notable valuation metric for CTS is its P/B ratio of 2.25. 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, OLED has a P/B of 3.72.
These metrics, and several others, help CTS earn a Value grade of A, while OLED has been given a Value grade of D.
CTS sticks out from OLED in both our Zacks Rank and Style Scores models, so value investors will likely feel that CTS is the better option right now.
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CTS Corporation (CTS): Free Stock Analysis Report Universal Display Corporation (OLED): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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