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PHG vs. GRMN: Which Stock Is the Better Value Option?

Zacks Equity Research

Investors with an interest in Electronics - Miscellaneous Products stocks have likely encountered both Royal Philips (PHG) and Garmin (GRMN). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Royal Philips and Garmin are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that PHG has an improving earnings outlook. But this is just one factor that value investors are interested in.

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.

PHG currently has a forward P/E ratio of 19.88, while GRMN has a forward P/E of 21.28. We also note that PHG has a PEG ratio of 1.37. 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. GRMN currently has a PEG ratio of 2.90.

Another notable valuation metric for PHG is its P/B ratio of 2.71. 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, GRMN has a P/B of 3.64.

Based on these metrics and many more, PHG holds a Value grade of B, while GRMN has 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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