Investors with an interest in Communication - Components stocks have likely encountered both Corning (GLW - Free Report) and Vocera Communications (VCRA - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Corning and Vocera Communications are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that GLW's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
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 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.
GLW currently has a forward P/E ratio of 19.50, while VCRA has a forward P/E of 78.99. We also note that GLW has a PEG ratio of 2.38. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. VCRA currently has a PEG ratio of 4.23.
Another notable valuation metric for GLW is its P/B ratio of 2.35. 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, VCRA has a P/B of 6.55.
Based on these metrics and many more, GLW holds a Value grade of B, while VCRA has a Value grade of F.
GLW is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that GLW is likely the superior value option right now.