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OSIS vs. NJDCY: Which Stock Is the Better Value Option?

Zacks Equity Research

Investors looking for stocks in the Electronics - Miscellaneous Components sector might want to consider either OSI Systems (OSIS) or Nidec Corp. (NJDCY). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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.

Currently, OSI Systems has a Zacks Rank of #1 (Strong Buy), while Nidec Corp. has a Zacks Rank of #5 (Strong Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that OSIS is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.

OSIS currently has a forward P/E ratio of 23.88, while NJDCY has a forward P/E of 29.23. We also note that OSIS has a PEG ratio of 1.91. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. NJDCY currently has a PEG ratio of 2.40.

Another notable valuation metric for OSIS is its P/B ratio of 3.78. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, NJDCY has a P/B of 4.20.

These metrics, and several others, help OSIS earn a Value grade of B, while NJDCY has been given a Value grade of F.

OSIS 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 OSIS is likely the superior value option right now.


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OSI Systems, Inc. (OSIS) : Free Stock Analysis Report
 
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