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HEAR vs. ACIA: Which Stock Is the Better Value Option?

Zacks Equity Research

Investors interested in Communication - Components stocks are likely familiar with Turtle Beach (HEAR) and Acacia Communications, Inc. (ACIA). 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.

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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, Turtle Beach has a Zacks Rank of #2 (Buy), while Acacia Communications, Inc. 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 HEAR has 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.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

HEAR currently has a forward P/E ratio of 9.21, while ACIA has a forward P/E of 27.32. We also note that HEAR has a PEG ratio of 1.02. 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. ACIA currently has a PEG ratio of 1.48.

Another notable valuation metric for HEAR is its P/B ratio of 3.18. 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, ACIA has a P/B of 3.51.

Based on these metrics and many more, HEAR holds a Value grade of A, while ACIA has a Value grade of D.

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


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