Investors interested in Electronics - Miscellaneous Components stocks are likely familiar with TDK Corp. (TTDKY) and OSI Systems (OSIS). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, TDK Corp. is sporting a Zacks Rank of #2 (Buy), while OSI Systems has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that TTDKY likely has seen a stronger improvement to its earnings outlook than OSIS has recently. But this is only part of the picture for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
TTDKY currently has a forward P/E ratio of 22.04, while OSIS has a forward P/E of 24.13. We also note that TTDKY has a PEG ratio of 1.51. 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. OSIS currently has a PEG ratio of 2.11.
Another notable valuation metric for TTDKY is its P/B ratio of 2.36. 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, OSIS has a P/B of 4.36.
These metrics, and several others, help TTDKY earn a Value grade of B, while OSIS has been given a Value grade of C.
TTDKY is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that TTDKY is likely the superior value 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
TDK Corp. (TTDKY): Free Stock Analysis Report OSI Systems, Inc. (OSIS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
