Investors interested in Electronics - Miscellaneous Components stocks are likely familiar with TE Connectivity (TEL) and Nidec Corp. (NJDCY). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
TE Connectivity and Nidec Corp. are sporting Zacks Ranks of #2 (Buy) and #5 (Strong Sell), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that TEL is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
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.
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.
TEL currently has a forward P/E ratio of 17.10, while NJDCY has a forward P/E of 28.69. We also note that TEL has a PEG ratio of 1.66. 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. NJDCY currently has a PEG ratio of 2.29.
Another notable valuation metric for TEL is its P/B ratio of 3.23. 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, NJDCY has a P/B of 4.35.
These metrics, and several others, help TEL earn a Value grade of A, while NJDCY has been given a Value grade of F.
TEL 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 TEL is likely the superior value option right now.
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TE Connectivity Ltd. (TEL) : Free Stock Analysis Report
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