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

Zacks Equity Research

Investors looking for stocks in the Communication - Components sector might want to consider either Turtle Beach (HEAR) or Aerohive Networks (HIVE). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, Turtle Beach has a Zacks Rank of #2 (Buy), while Aerohive Networks has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that HEAR is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.

HEAR currently has a forward P/E ratio of 9.36, while HIVE has a forward P/E of 46.12. We also note that HEAR has a PEG ratio of 0.62. 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. HIVE currently has a PEG ratio of 2.10.

Another notable valuation metric for HEAR is its P/B ratio of 9.70. 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, HIVE has a P/B of 10.45.

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

HEAR stands above HIVE 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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