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PHG vs. GRMN: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
·2 mins read

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 companies is the best option for those looking for undervalued stocks? Let's 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.

Both Royal Philips and Garmin have a Zacks Rank of # 2 (Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. However, value investors will care about much more than just this.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.

PHG currently has a forward P/E ratio of 21.50, while GRMN has a forward P/E of 24.99. We also note that PHG has a PEG ratio of 2.12. 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. GRMN currently has a PEG ratio of 3.67.

Another notable valuation metric for PHG is its P/B ratio of 3.91. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, GRMN has a P/B of 4.09.

These are just a few of the metrics contributing to PHG's Value grade of B and GRMN's Value grade of C.

Both PHG and GRMN are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that PHG is the superior value 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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