Investors interested in Electronics - Miscellaneous Components stocks are likely familiar with TE Connectivity (TEL) and Weg SA (WEGZY). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
TE Connectivity has a Zacks Rank of #2 (Buy), while Weg SA has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that TEL likely has seen a stronger improvement to its earnings outlook than WEGZY has recently. 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.
TEL currently has a forward P/E ratio of 17.54, while WEGZY has a forward P/E of 31.98. We also note that TEL has a PEG ratio of 1.35. 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. WEGZY currently has a PEG ratio of 2.54.
Another notable valuation metric for TEL is its P/B ratio of 4.42. 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, WEGZY has a P/B of 10.58.
Based on these metrics and many more, TEL holds a Value grade of B, while WEGZY has a Value grade of F.
TEL sticks out from WEGZY in both our Zacks Rank and Style Scores models, so value investors will likely feel that TEL is the better option right now.
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TE Connectivity Ltd. (TEL): Free Stock Analysis Report
Weg SA (WEGZY): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).