Investors looking for stocks in the Electronics - Miscellaneous Components sector might want to consider either TE Connectivity (TEL) or Universal Display Corp. (OLED). 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.
TE Connectivity and Universal Display Corp. are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that TEL likely has seen a stronger improvement to its earnings outlook than OLED has recently. But this is only part of the picture for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
TEL currently has a forward P/E ratio of 16.87, while OLED has a forward P/E of 78.03. We also note that TEL has a PEG ratio of 1.58. 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. OLED currently has a PEG ratio of 2.60.
Another notable valuation metric for TEL is its P/B ratio of 3.18. 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, OLED has a P/B of 10.81.
These metrics, and several others, help TEL earn a Value grade of A, while OLED 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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