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Investors interested in stocks from the Electronics - Miscellaneous Components sector have probably already heard of Nidec Corp. (NJDCY) and OSI Systems (OSIS). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, both Nidec Corp. and OSI Systems are holding a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. However, value investors will care about much more than just this.
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.
NJDCY currently has a forward P/E ratio of 16.17, while OSIS has a forward P/E of 20.88. We also note that NJDCY has a PEG ratio of 0.54. 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. OSIS currently has a PEG ratio of 1.62.
Another notable valuation metric for NJDCY is its P/B ratio of 3.34. 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, OSIS has a P/B of 3.93.
These metrics, and several others, help NJDCY earn a Value grade of B, while OSIS has been given a Value grade of C.
Both NJDCY and OSIS are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that NJDCY is the superior value option right now.
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Nidec Corp. (NJDCY) : Free Stock Analysis Report
OSI Systems, Inc. (OSIS) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).