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 stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Right now, both Hayward Holdings, Inc. and Garmin are sporting a Zacks Rank of #2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. 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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
HAYW currently has a forward P/E ratio of 21.00, while GRMN has a forward P/E of 30.68. We also note that HAYW has a PEG ratio of 2.07. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. GRMN currently has a PEG ratio of 2.75.
Another notable valuation metric for HAYW is its P/B ratio of 2.22. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, GRMN has a P/B of 5.88.
These are just a few of the metrics contributing to HAYW's Value grade of B and GRMN's Value grade of D.
Both HAYW and GRMN are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that HAYW is 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
Hayward Holdings, Inc. (HAYW): Free Stock Analysis Report Garmin Ltd. (GRMN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
