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

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Investors interested in Communication - Components stocks are likely familiar with Knowles (KN) and Harmonic (HLIT). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 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 Harmonic 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 KN is likely seeing its earnings outlook improve to a greater extent. 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 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 16.99, while HLIT has a forward P/E of 31.68. We also note that KN has a PEG ratio of 1.70. 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. HLIT currently has a PEG ratio of 2.11.

Another notable valuation metric for KN is its P/B ratio of 1.51. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, HLIT has a P/B of 3.

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

KN is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that KN is likely the superior value option right now.


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Knowles Corporation (KN) : Free Stock Analysis Report
 
Harmonic Inc. (HLIT) : Free Stock Analysis Report
 
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