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Investors with an interest in Electronics - Miscellaneous Components stocks have likely encountered both TDK Corp. (TTDKY) and nVent Electric (NVT). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
TDK Corp. and nVent Electric are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that TTDKY has an improving earnings outlook. 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.
TTDKY currently has a forward P/E ratio of 20, while NVT has a forward P/E of 27.97. We also note that TTDKY has a PEG ratio of 0.80. 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. NVT currently has a PEG ratio of 3.60.
Another notable valuation metric for TTDKY is its P/B ratio of 2.18. 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, NVT has a P/B of 3.50.
These metrics, and several others, help TTDKY earn a Value grade of B, while NVT has been given a Value grade of D.
TTDKY has seen stronger estimate revision activity and sports more attractive valuation metrics than NVT, so it seems like value investors will conclude that TTDKY is the superior option right now.
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TDK Corp. (TTDKY) : Free Stock Analysis Report
nVent Electric PLC (NVT) : Free Stock Analysis Report