Investors interested in stocks from the Audio Video Production sector have probably already heard of Sony (SNE - Free Report) and Dolby Laboratories (DLB - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Sony and Dolby Laboratories are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. Investors should feel comfortable knowing that SNE likely has seen a stronger improvement to its earnings outlook than DLB has recently. But this is only part of the picture for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.
SNE currently has a forward P/E ratio of 10.89, while DLB has a forward P/E of 20.99. We also note that SNE has a PEG ratio of 1.08. 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. DLB currently has a PEG ratio of 1.75.
Another notable valuation metric for SNE is its P/B ratio of 1.73. 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, DLB has a P/B of 3.02.
These metrics, and several others, help SNE earn a Value grade of A, while DLB has been given a Value grade of D.
SNE 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 SNE is likely the superior value option right now.