Investors interested in Communication - Components stocks are likely familiar with Turtle Beach (HEAR - Free Report) and Acacia Communications, Inc. (ACIA - 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.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Turtle Beach and Acacia Communications, Inc. are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that HEAR's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.
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.
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.
HEAR currently has a forward P/E ratio of 8.53, while ACIA has a forward P/E of 32.21. We also note that HEAR has a PEG ratio of 0.95. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ACIA currently has a PEG ratio of 1.74.
Another notable valuation metric for HEAR is its P/B ratio of 2.95. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, ACIA has a P/B of 4.14.
Based on these metrics and many more, HEAR holds a Value grade of A, while ACIA has a Value grade of F.
HEAR 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 HEAR is likely the superior value option right now.