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PHG or GRMN: Which Is the Better Value Stock Right Now?

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Investors looking for stocks in the Electronics - Miscellaneous Products sector might want to consider either Royal Philips (PHG - Free Report) or Garmin (GRMN - Free Report) . 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.

Both Royal Philips and Garmin have a Zacks Rank of # 2 (Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. However, value investors will care about much more than just this.

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 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.

PHG currently has a forward P/E ratio of 19.34, while GRMN has a forward P/E of 24.55. We also note that PHG has a PEG ratio of 1.91. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. GRMN currently has a PEG ratio of 3.61.

Another notable valuation metric for PHG is its P/B ratio of 3.51. 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, GRMN has a P/B of 4.02.

These are just a few of the metrics contributing to PHG's Value grade of B and GRMN's Value grade of D.

Both PHG and GRMN are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that PHG is the superior value option right now.


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Garmin Ltd. (GRMN) - free report >>

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