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.
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 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. 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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
PHG currently has a forward P/E ratio of 20.88, while GRMN has a forward P/E of 22.77. We also note that PHG has a PEG ratio of 1.55. 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 3.10.
Another notable valuation metric for PHG is its P/B ratio of 3.35. 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, GRMN has a P/B of 4.39.
Based on these metrics and many more, PHG holds a Value grade of B, while GRMN has a Value grade of D.
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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