Investors interested in Electronics – Miscellaneous Components stocks are likely familiar with TDK Corp. (TTDKY) and IntriCon Corporation (IIN). 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
TDK Corp. and IntriCon Corporation are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that TTDKY has an improving earnings outlook. However, value investors will care about much more than just this.
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 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.
TTDKY currently has a forward P/E ratio of 17.50, while IIN has a forward P/E of 80.87. We also note that TTDKY has a PEG ratio of 0.65. 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. IIN currently has a PEG ratio of 6.74.
Another notable valuation metric for TTDKY is its P/B ratio of 2.08. 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, IIN has a P/B of 2.46.
These metrics, and several others, help TTDKY earn a Value grade of A, while IIN has been given a Value grade of D.
TTDKY sticks out from IIN in both our Zacks Rank and Style Scores models, so value investors will likely feel that TTDKY is the better option right now.
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