Investors with an interest in Electronics - Miscellaneous Products stocks have likely encountered both Daktronics (DAKT) and Rockwell Automation (ROK). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Daktronics and Rockwell Automation are both sporting a Zacks Rank of #2 (Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one piece of the puzzle 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 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.
DAKT currently has a forward P/E ratio of 19.22, while ROK has a forward P/E of 35.12. We also note that DAKT has a PEG ratio of 0.64. 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. ROK currently has a PEG ratio of 2.84.
Another notable valuation metric for DAKT is its P/B ratio of 3.57. 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, ROK has a P/B of 12.76.
These metrics, and several others, help DAKT earn a Value grade of B, while ROK has been given a Value grade of D.
Both DAKT and ROK are impressive stocks with solid earnings outlooks, but based on these valuation figures, we 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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