OSIS vs. TEL: Which Stock Is the Better Value Option?
Investors looking for stocks in the Electronics - Miscellaneous Components sector might want to consider either OSI Systems (OSIS) or 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, OSI Systems is sporting a Zacks Rank of #2 (Buy), while TE Connectivity has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that OSIS likely has seen a stronger improvement to its earnings outlook than TEL has recently. But this is just one piece of the puzzle 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.
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 17.19, while TEL has a forward P/E of 19.38. We also note that OSIS has a PEG ratio of 1.56. 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 2.75.
Another notable valuation metric for OSIS is its P/B ratio of 3.09. 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 3.59.
Based on these metrics and many more, OSIS holds a Value grade of B, while TEL has a Value grade of C.
OSIS sticks out from TEL in both our Zacks Rank and Style Scores models, so value investors will likely feel that OSIS is the better option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
OSI Systems, Inc. (OSIS) : Free Stock Analysis Report
TE Connectivity Ltd. (TEL) : Free Stock Analysis Report
