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KN vs. AUDC: Which Stock Is the Better Value Option?

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Investors interested in Communication - Components stocks are likely familiar with Knowles (KN) and AudioCodes (AUDC). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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, Knowles has a Zacks Rank of #2 (Buy), while AudioCodes has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that KN likely has seen a stronger improvement to its earnings outlook than AUDC has recently. However, value investors will care about much more than just this.

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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

KN currently has a forward P/E ratio of 16.75, while AUDC has a forward P/E of 19.91. We also note that KN has a PEG ratio of 1.68. 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. AUDC currently has a PEG ratio of 1.75.

Another notable valuation metric for KN is its P/B ratio of 1.49. 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, AUDC has a P/B of 4.62.

These metrics, and several others, help KN earn a Value grade of B, while AUDC has been given a Value grade of C.

KN sticks out from AUDC in both our Zacks Rank and Style Scores models, so value investors will likely feel that KN is the better option right now.


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