Back to top

Image: Bigstock

TTDKY vs. TEL: Which Stock Is the Better Value Option?

Read MoreHide Full Article

Investors interested in Electronics - Miscellaneous Components stocks are likely familiar with TDK Corp. (TTDKY - Free Report) and 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.

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.

Right now, TDK Corp. is sporting a Zacks Rank of #2 (Buy), while TE Connectivity has a Zacks Rank of #4 (Sell). This means that TTDKY's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.

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.

TTDKY currently has a forward P/E ratio of 10.77, while TEL has a forward P/E of 19.17. We also note that TTDKY has a PEG ratio of 0.99. 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 2.79.

Another notable valuation metric for TTDKY is its P/B ratio of 1.16. 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, TEL has a P/B of 3.53.

Based on these metrics and many more, TTDKY holds a Value grade of A, while TEL has a Value grade of C.

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


See More Zacks Research for These Tickers


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


TE Connectivity Ltd. (TEL) - free report >>

TDK Corp. (TTDKY) - free report >>

Published in