Investors interested in stocks from the Electronics - Miscellaneous Products sector have probably already heard of Kimball Electronics (KE) and Hoya Corp. (HOCPY). 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.
Currently, Kimball Electronics has a Zacks Rank of #1 (Strong Buy), while Hoya Corp. has a Zacks Rank of #4 (Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that KE has an improving earnings outlook. However, value investors will care about much more than just this.
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.
KE currently has a forward P/E ratio of 20.82, while HOCPY has a forward P/E of 35.18. We also note that KE has a PEG ratio of 1.04. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. HOCPY currently has a PEG ratio of 3.05.
Another notable valuation metric for KE is its P/B ratio of 1.19. 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, HOCPY has a P/B of 7.64.
These are just a few of the metrics contributing to KE's Value grade of A and HOCPY's Value grade of D.
KE stands above HOCPY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that KE is the superior value option right now.
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Kimball Electronics, Inc. (KE): Free Stock Analysis Report Hoya Corp. (HOCPY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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