Back to top

Image: Bigstock

MKSI vs. TER: Which Stock Is the Better Value Option?

Read MoreHide Full Article

Investors with an interest in Electronics - Miscellaneous Products stocks have likely encountered both MKS (MKSI - Free Report) and Teradyne (TER - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, MKS has a Zacks Rank of #1 (Strong Buy), while Teradyne has a Zacks Rank of #3 (Hold). This means that MKSI'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 analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.

MKSI currently has a forward P/E ratio of 15.40, while TER has a forward P/E of 29.16. We also note that MKSI has a PEG ratio of 1.15. 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. TER currently has a PEG ratio of 4.03.

Another notable valuation metric for MKSI is its P/B ratio of 2.93. 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, TER has a P/B of 5.23.

These metrics, and several others, help MKSI earn a Value grade of B, while TER has been given a Value grade of D.

MKSI sticks out from TER in both our Zacks Rank and Style Scores models, so value investors will likely feel that MKSI is the better option right now.


See More Zacks Research for These Tickers


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


MKS Inc. (MKSI) - free report >>

Teradyne, Inc. (TER) - free report >>

Published in