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KYOCY or TEL: Which Is the Better Value Stock Right Now?
Investors looking for stocks in the Electronics - Miscellaneous Components sector might want to consider either Kyocera (KYOCY - Free Report) or TE Connectivity (TEL - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.
Currently, Kyocera has a Zacks Rank of #2 (Buy), while TE Connectivity has a Zacks Rank of #4 (Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that KYOCY is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture 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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
KYOCY currently has a forward P/E ratio of 14.56, while TEL has a forward P/E of 18.25. We also note that KYOCY has a PEG ratio of 1.66. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. TEL currently has a PEG ratio of 2.54.
Another notable valuation metric for KYOCY is its P/B ratio of 0.74. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, TEL has a P/B of 3.76.
These are just a few of the metrics contributing to KYOCY's Value grade of A and TEL's Value grade of C.
KYOCY has seen stronger estimate revision activity and sports more attractive valuation metrics than TEL, so it seems like value investors will conclude that KYOCY is the superior option right now.