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LITE or IPGP: Which Is the Better Value Stock Right Now?

Zacks Equity Research

Investors looking for stocks in the Lasers Systems and Components sector might want to consider either Lumentum (LITE) or IPG Photonics (IPGP). But which of these two stocks presents investors with the better value opportunity right now? 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Lumentum and IPG Photonics are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that LITE 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 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.

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.

LITE currently has a forward P/E ratio of 11.28, while IPGP has a forward P/E of 28.15. We also note that LITE has a PEG ratio of 1.03. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. IPGP currently has a PEG ratio of 3.82.

Another notable valuation metric for LITE is its P/B ratio of 2.62. 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, IPGP has a P/B of 2.97.

These are just a few of the metrics contributing to LITE's Value grade of B and IPGP's Value grade of C.

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


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Lumentum Holdings Inc. (LITE) : Free Stock Analysis Report
 
IPG Photonics Corporation (IPGP) : Free Stock Analysis Report
 
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