Investors with an interest in Electronics - Miscellaneous Components stocks have likely encountered both TDK Corp. (TTDKY) and OSI Systems (OSIS). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 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, TDK Corp. is sporting a Zacks Rank of #2 (Buy), while OSI Systems has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that TTDKY is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.
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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
TTDKY currently has a forward P/E ratio of 18.29, while OSIS has a forward P/E of 24.00. We also note that TTDKY has a PEG ratio of 1.04. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. OSIS currently has a PEG ratio of 2.07.
Another notable valuation metric for TTDKY is its P/B ratio of 1.9. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, OSIS has a P/B of 4.87.
Based on these metrics and many more, TTDKY holds a Value grade of A, while OSIS has a Value grade of C.
TTDKY has seen stronger estimate revision activity and sports more attractive valuation metrics than OSIS, so it seems like value investors will conclude that TTDKY is the superior option right now.
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TDK Corp. (TTDKY): Free Stock Analysis Report OSI Systems, Inc. (OSIS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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