Investors looking for stocks in the Electronics - Miscellaneous Products sector might want to consider either Daktronics (DAKT) or Rockwell Automation (ROK). But which of these two stocks presents investors with the better value opportunity right now? 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.
Daktronics and Rockwell Automation are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that DAKT likely has seen a stronger improvement to its earnings outlook than ROK has recently. 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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
DAKT currently has a forward P/E ratio of 18.26, while ROK has a forward P/E of 29.99. We also note that DAKT has a PEG ratio of 0.61. 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. ROK currently has a PEG ratio of 3.09.
Another notable valuation metric for DAKT is its P/B ratio of 3.49. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, ROK has a P/B of 10.66.
Based on these metrics and many more, DAKT holds a Value grade of B, while ROK has a Value grade of D.
DAKT stands above ROK thanks to its solid earnings outlook, and based on these valuation figures, we also feel that DAKT is the superior value option right now.
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Daktronics, Inc. (DAKT): Free Stock Analysis Report Rockwell Automation, Inc. (ROK): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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