Investors interested in Electronics - Miscellaneous Components stocks are likely familiar with TE Connectivity (TEL) and Vishay Precision (VPG). But which of these two stocks presents investors with the better value opportunity right now? Let's 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.
Currently, TE Connectivity has a Zacks Rank of #2 (Buy), while Vishay Precision has a Zacks Rank of #3 (Hold). This means that TEL's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.
TEL currently has a forward P/E ratio of 17.42, while VPG has a forward P/E of 113.37. We also note that TEL has a PEG ratio of 1.38. 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. VPG currently has a PEG ratio of 5.67.
Another notable valuation metric for TEL is its P/B ratio of 4.38. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, VPG has a P/B of 4.4.
Based on these metrics and many more, TEL holds a Value grade of B, while VPG has a Value grade of F.
TEL 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 TEL is likely the superior value option right now.
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TE Connectivity Ltd. (TEL): Free Stock Analysis Report
Vishay Precision Group, Inc. (VPG): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).