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Investors looking for stocks in the Electronics - Miscellaneous Products sector might want to consider either Universal Electronics (UEIC) or Garmin (GRMN). 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.
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.
Right now, Universal Electronics is sporting a Zacks Rank of #2 (Buy), while Garmin has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that UEIC has an improving earnings outlook. However, value investors will care about much more than just this.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.
UEIC currently has a forward P/E ratio of 15.07, while GRMN has a forward P/E of 27.98. We also note that UEIC has a PEG ratio of 1. 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. GRMN currently has a PEG ratio of 1.30.
Another notable valuation metric for UEIC is its P/B ratio of 0.83. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, GRMN has a P/B of 5.48.
These metrics, and several others, help UEIC earn a Value grade of B, while GRMN has been given a Value grade of D.
UEIC has seen stronger estimate revision activity and sports more attractive valuation metrics than GRMN, so it seems like value investors will conclude that UEIC is the superior option right now.
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Universal Electronics Inc. (UEIC) : Free Stock Analysis Report
Garmin Ltd. (GRMN) : Free Stock Analysis Report