Back to top

Image: Bigstock

SNE vs. DLB: Which Stock Should Value Investors Buy Now?

Read MoreHide Full Article

Investors interested in Audio Video Production stocks are likely familiar with Sony and Dolby Laboratories (DLB - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. 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.

Sony has a Zacks Rank of #2 (Buy), while Dolby Laboratories has a Zacks Rank of #4 (Sell) right now. Investors should feel comfortable knowing that SNE likely has seen a stronger improvement to its earnings outlook than DLB has recently. However, value investors will care about much more than just this.

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.

SNE currently has a forward P/E ratio of 11.65, while DLB has a forward P/E of 22.97. We also note that SNE has a PEG ratio of 1.16. 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. DLB currently has a PEG ratio of 1.91.

Another notable valuation metric for SNE is its P/B ratio of 1.85. 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, DLB has a P/B of 3.31.

These are just a few of the metrics contributing to SNE's Value grade of A and DLB's Value grade of D.

SNE stands above DLB thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SNE is the superior value option right now.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Dolby Laboratories (DLB) - free report >>

Published in