AUDC vs. ANET: Which Stock Is the Better Value Option?
Investors with an interest in Communication - Components stocks have likely encountered both 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.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, both AudioCodes and Arista Networks are sporting a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is just one piece of the puzzle for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.
AUDC currently has a forward P/E ratio of 12.28, while ANET has a forward P/E of 36.88. We also note that AUDC has a PEG ratio of 0.49. 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. ANET currently has a PEG ratio of 2.11.
Another notable valuation metric for AUDC is its P/B ratio of 2.23. 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, ANET has a P/B of 11.77.
These are just a few of the metrics contributing to AUDC's Value grade of B and ANET's Value grade of F.
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
