Investors interested in stocks from the Electronics - Miscellaneous Products sector have probably already heard of Royal Philips (PHG) and Garmin (GRMN). 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Royal Philips has a Zacks Rank of #1 (Strong Buy), while Garmin has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that PHG likely has seen a stronger improvement to its earnings outlook than GRMN has recently. But this is just one piece of the puzzle for value investors.
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.
PHG currently has a forward P/E ratio of 17.23, while GRMN has a forward P/E of 22.87. We also note that PHG has a PEG ratio of 1.14. 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. GRMN currently has a PEG ratio of 3.11.
Another notable valuation metric for PHG is its P/B ratio of 2.54. 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, GRMN has a P/B of 3.92.
These metrics, and several others, help PHG earn a Value grade of B, while GRMN has been given a Value grade of D.
PHG sticks out from GRMN in both our Zacks Rank and Style Scores models, so value investors will likely feel that PHG is the better option right now.
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Koninklijke Philips N.V. (PHG) : Free Stock Analysis Report
Garmin Ltd. (GRMN) : Free Stock Analysis Report
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