IIVI vs. EMR: Which Stock Is the Better Value Option?
Investors interested in stocks from the Manufacturing - Electronics sector have probably already heard of II-VI (IIVI) and Emerson Electric (EMR). 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.
II-VI and Emerson Electric are both sporting a Zacks Rank of # 2 (Buy) right now. 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 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.
IIVI currently has a forward P/E ratio of 18.69, while EMR has a forward P/E of 23.94. We also note that IIVI has a PEG ratio of 0.93. 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. EMR currently has a PEG ratio of 2.44.
Another notable valuation metric for IIVI is its P/B ratio of 2.54. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, EMR has a P/B of 5.98.
These metrics, and several others, help IIVI earn a Value grade of B, while EMR has been given a Value grade of C.
Both IIVI and EMR are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that IIVI is the superior value option right now.
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IIVI Incorporated (IIVI) : Free Stock Analysis Report
Emerson Electric Co. (EMR) : Free Stock Analysis Report
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