Investors interested in Electronics - Miscellaneous Components stocks are likely familiar with OSI Systems (OSIS) and Universal Display Corp. (OLED). 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.
OSI Systems and Universal Display Corp. are sporting Zacks Ranks of #1 (Strong Buy) and #5 (Strong Sell), respectively, right now. 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.
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.
OSIS currently has a forward P/E ratio of 21.91, while OLED has a forward P/E of 53.35. We also note that OSIS has a PEG ratio of 1.75. 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. OLED currently has a PEG ratio of 1.78.
Another notable valuation metric for OSIS is its P/B ratio of 3.21. 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, OLED has a P/B of 7.73.
These metrics, and several others, help OSIS earn a Value grade of B, while OLED has been given a Value grade of F.
OSIS sticks out from OLED in both our Zacks Rank and Style Scores models, so value investors will likely feel that OSIS is the better option right now.
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