Investors interested in stocks from the Electronics - Miscellaneous Components sector have probably already heard of Kyocera (KYOCY) and TE Connectivity (TEL). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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.
Currently, Kyocera has a Zacks Rank of #2 (Buy), while TE Connectivity has a Zacks Rank of #5 (Strong Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that KYOCY has an improving earnings outlook. However, value investors will care about much more than just this.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
KYOCY currently has a forward P/E ratio of 16.20, while TEL has a forward P/E of 16.49. We also note that KYOCY has a PEG ratio of 1.26. 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. TEL currently has a PEG ratio of 1.54.
Another notable valuation metric for KYOCY is its P/B ratio of 1.04. 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, TEL has a P/B of 2.88.
These are just a few of the metrics contributing to KYOCY's Value grade of A and TEL's Value grade of C.
KYOCY has seen stronger estimate revision activity and sports more attractive valuation metrics than TEL, so it seems like value investors will conclude that KYOCY is the superior option right now.
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Kyocera Corporation (KYOCY) : Free Stock Analysis Report
TE Connectivity Ltd. (TEL) : Free Stock Analysis Report
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