DAKT vs. GRMN: Which Stock Is the Better Value Option?

Investors looking for stocks in the Electronics - Miscellaneous Products sector might want to consider either Daktronics (DAKT) or 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.

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.

Currently, Daktronics has a Zacks Rank of #2 (Buy), while Garmin has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that DAKT has an improving earnings outlook. But this is just one factor that value investors are interested in.

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 20.31, while GRMN has a forward P/E of 23.00. We also note that DAKT has a PEG ratio of 0.68. 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. GRMN currently has a PEG ratio of 2.13.

Another notable valuation metric for DAKT is its P/B ratio of 3.78. 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, GRMN has a P/B of 4.57.

These are just a few of the metrics contributing to DAKT's Value grade of B and GRMN's Value grade of D.

DAKT stands above GRMN thanks to its solid earnings outlook, and based on these valuation figures, we also feel that DAKT is the superior value option right now.

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

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