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KN vs. VCRA: Which Stock Should Value Investors Buy Now?

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·2 min read
In this article:
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  • VCRA
  • KN

Investors with an interest in Communication - Components stocks have likely encountered both Knowles (KN) and Vocera Communications (VCRA). 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, Knowles is sporting a Zacks Rank of #2 (Buy), while Vocera Communications has a Zacks Rank of #4 (Sell). This means that KN's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.

KN currently has a forward P/E ratio of 15.45, while VCRA has a forward P/E of 74.36. We also note that KN has a PEG ratio of 1.55. 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. VCRA currently has a PEG ratio of 5.13.

Another notable valuation metric for KN is its P/B ratio of 1.38. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, VCRA has a P/B of 9.74.

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

KN has seen stronger estimate revision activity and sports more attractive valuation metrics than VCRA, so it seems like value investors will conclude that KN is the superior option right now.

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Knowles Corporation (KN) : Free Stock Analysis Report
Vocera Communications, Inc. (VCRA) : Free Stock Analysis Report
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