Investors interested in Electronics - Miscellaneous Products stocks are likely familiar with Daktronics (DAKT) and Garmin (GRMN). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Daktronics has a Zacks Rank of #1 (Strong Buy), while Garmin has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that DAKT is likely seeing its earnings outlook improve to a greater extent. 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.
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.
DAKT currently has a forward P/E ratio of 15.02, while GRMN has a forward P/E of 24.39. We also note that DAKT has a PEG ratio of 0.50. 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. GRMN currently has a PEG ratio of 2.75.
Another notable valuation metric for DAKT is its P/B ratio of 3.14. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, GRMN has a P/B of 4.84.
Based on these metrics and many more, DAKT holds a Value grade of B, while GRMN has a Value grade of D.
DAKT sticks out from GRMN in both our Zacks Rank and Style Scores models, so value investors will likely feel that DAKT is the better option right now.
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Daktronics, Inc. (DAKT): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).