Back to top

Image: Bigstock

SONY or DLB: Which Is the Better Value Stock Right Now?

Read MoreHide Full Article

Investors interested in stocks from the Audio Video Production sector have probably already heard of Sony (SONY - Free Report) and Dolby Laboratories (DLB - 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Sony has a Zacks Rank of #2 (Buy), while Dolby Laboratories has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that SONY likely has seen a stronger improvement to its earnings outlook than DLB has recently. 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.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

SONY currently has a forward P/E ratio of 17.52, while DLB has a forward P/E of 26.48. We also note that SONY has a PEG ratio of 1.51. 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. DLB currently has a PEG ratio of 2.04.

Another notable valuation metric for SONY is its P/B ratio of 2.36. 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 3.74.

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

SONY has seen stronger estimate revision activity and sports more attractive valuation metrics than DLB, so it seems like value investors will conclude that SONY is the superior option right now.

In-Depth Zacks Research for the Tickers Above

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

Sony Corporation (SONY) - free report >>

Dolby Laboratories (DLB) - free report >>

Published in