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Investors interested in stocks from the Electronics - Miscellaneous Components sector have probably already heard of TDK Corp. (TTDKY) and Universal Display Corp. (OLED). But which of these two stocks presents investors with the better value opportunity right now? 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
TDK Corp. has a Zacks Rank of #1 (Strong Buy), while Universal Display Corp. has a Zacks Rank of #3 (Hold) right now. This means that TTDKY's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
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.
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.
TTDKY currently has a forward P/E ratio of 19.17, while OLED has a forward P/E of 31.92. We also note that TTDKY has a PEG ratio of 0.77. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. OLED currently has a PEG ratio of 1.64.
Another notable valuation metric for TTDKY is its P/B ratio of 2.04. 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, OLED has a P/B of 4.49.
These are just a few of the metrics contributing to TTDKY's Value grade of A and OLED's Value grade of D.
TTDKY 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 TTDKY is likely the superior value option right now.
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TDK Corp. (TTDKY) : Free Stock Analysis Report