Investors interested in Electronics - Miscellaneous Components stocks are likely familiar with TDK Corp. (TTDKY) and Universal Display Corp. (OLED). 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
TDK Corp. and Universal Display Corp. are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that TTDKY's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst 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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
TTDKY currently has a forward P/E ratio of 22.06, while OLED has a forward P/E of 22.28. We also note that TTDKY has a PEG ratio of 1.26. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. OLED currently has a PEG ratio of 3.37.
Another notable valuation metric for TTDKY is its P/B ratio of 2.22. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, OLED has a P/B of 3.27.
These are just a few of the metrics contributing to TTDKY's Value grade of A and OLED's Value grade of D.
TTDKY stands above OLED thanks to its solid earnings outlook, and based on these valuation figures, we also feel that TTDKY is the superior value option right now.
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TDK Corp. (TTDKY): Free Stock Analysis Report Universal Display Corporation (OLED): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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