Investors with an interest in Electronics - Miscellaneous Components stocks have likely encountered both Stoneridge (SRI - Free Report) and Universal Display Corp. (OLED - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, Stoneridge is sporting a Zacks Rank of #1 (Strong Buy), while Universal Display Corp. has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that SRI likely has seen a stronger improvement to its earnings outlook than OLED has recently. 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.
SRI currently has a forward P/E ratio of 18.66, while OLED has a forward P/E of 62.42. We also note that SRI has a PEG ratio of 2.07. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. OLED currently has a PEG ratio of 2.08.
Another notable valuation metric for SRI is its P/B ratio of 2.93. 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, OLED has a P/B of 10.50.
These are just a few of the metrics contributing to SRI's Value grade of B and OLED's Value grade of F.
SRI 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 SRI is likely the superior value option right now.