Investors with an interest in Electronics - Miscellaneous Products stocks have likely encountered both Mistras (MG) and 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.
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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Mistras and Garmin are sporting Zacks Ranks of #1 (Strong Buy) and #2 (Buy), respectively, right now. This means that MG's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
MG currently has a forward P/E ratio of 17.93, while GRMN has a forward P/E of 26.34. We also note that MG has a PEG ratio of 1.12. 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. GRMN currently has a PEG ratio of 2.97.
Another notable valuation metric for MG is its P/B ratio of 2.52. 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 5.31.
These metrics, and several others, help MG earn a Value grade of B, while GRMN has been given a Value grade of D.
MG stands above GRMN thanks to its solid earnings outlook, and based on these valuation figures, we also feel that MG is the superior value option right now.
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Mistras Group Inc (MG): Free Stock Analysis Report
Garmin Ltd. (GRMN): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).