Investors interested in Electronics - Miscellaneous Components stocks are likely familiar with OSI Systems (OSIS - Free Report) and Nidec Corp. (NJDCY - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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.
Currently, OSI Systems has a Zacks Rank of #2 (Buy), while Nidec Corp. has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that OSIS likely has seen a stronger improvement to its earnings outlook than NJDCY has recently. 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.
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.
OSIS currently has a forward P/E ratio of 21.59, while NJDCY has a forward P/E of 33.36. We also note that OSIS has a PEG ratio of 1.73. 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. NJDCY currently has a PEG ratio of 2.05.
Another notable valuation metric for OSIS is its P/B ratio of 3.16. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, NJDCY has a P/B of 3.98.
These are just a few of the metrics contributing to OSIS's Value grade of A and NJDCY's Value grade of D.
OSIS sticks out from NJDCY in both our Zacks Rank and Style Scores models, so value investors will likely feel that OSIS is the better option right now.