Investors looking for stocks in the Electronics - Miscellaneous Products sector might want to consider either Royal Philips (PHG) or Trimble Navigation (TRMB). But which of these two stocks presents investors with the better value opportunity right now? 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 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 Trimble Navigation has a Zacks Rank of #3 (Hold) 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. However, value investors will care about much more than just this.
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 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 19.23, while TRMB has a forward P/E of 19.48. We also note that PHG has a PEG ratio of 1.33. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. TRMB currently has a PEG ratio of 1.86.
Another notable valuation metric for PHG is its P/B ratio of 2.62. 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, TRMB has a P/B of 3.75.
These metrics, and several others, help PHG earn a Value grade of B, while TRMB has been given a Value grade of D.
PHG is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that PHG is likely the superior value option right now.
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Koninklijke Philips N.V. (PHG) : Free Stock Analysis Report
Trimble Inc. (TRMB) : Free Stock Analysis Report
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