AUDC or ANET: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Communication - Components sector have probably already heard of AudioCodes (AUDC) and Arista Networks (ANET). 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.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, both AudioCodes and Arista Networks are holding a Zacks Rank of # 2 (Buy). 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 only part of the picture for value investors.
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 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.
AUDC currently has a forward P/E ratio of 16.70, while ANET has a forward P/E of 30.35. We also note that AUDC has a PEG ratio of 0.67. 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. ANET currently has a PEG ratio of 1.62.
Another notable valuation metric for AUDC is its P/B ratio of 1.75. 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, ANET has a P/B of 10.32.
These metrics, and several others, help AUDC earn a Value grade of B, while ANET has been given a Value grade of D.
Both AUDC and ANET are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that AUDC is the superior value option right now.
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AudioCodes Ltd. (AUDC) : Free Stock Analysis Report
Arista Networks, Inc. (ANET) : Free Stock Analysis Report
