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

Investors interested in Electronics - Miscellaneous Products stocks are likely familiar with 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.

Hayward Holdings, Inc. has a Zacks Rank of #2 (Buy), while Garmin has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that HAYW has an improving earnings outlook. However, value investors will care about much more than just this.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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 21.65, while GRMN has a forward P/E of 23.83. We also note that HAYW has a PEG ratio of 1.64. 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 2.21.

Another notable valuation metric for HAYW is its P/B ratio of 2.34. 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 4.43.

These metrics, and several others, help HAYW earn a Value grade of B, while GRMN has been given a Value grade of D.

HAYW 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 HAYW is likely the superior value option right now.

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

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