Back to top

ESIO or LITE: Which Is the Better Value Stock Right Now?

Read MoreHide Full Article

Investors looking for stocks in the Lasers Systems and Components sector might want to consider either Electro Scientific Industries (ESIO - Free Report) or Lumentum (LITE - 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, Electro Scientific Industries has a Zacks Rank of #2 (Buy), while Lumentum has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ESIO is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.

ESIO currently has a forward P/E ratio of 7.49, while LITE has a forward P/E of 15.86. We also note that ESIO has a PEG ratio of 0.62. 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. LITE currently has a PEG ratio of 0.86.

Another notable valuation metric for ESIO is its P/B ratio of 2.05. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, LITE has a P/B of 4.

These are just a few of the metrics contributing to ESIO's Value grade of B and LITE's Value grade of C.

ESIO stands above LITE thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ESIO is the superior value option right now.




In-Depth Zacks Research for the Tickers Above


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


Electro Scientific Industries, Inc. (ESIO) - free report >>

Lumentum Holdings Inc. (LITE) - free report >>

More from Zacks Tale of the Tape

You May Like