Investors with an interest in Electronics - Miscellaneous Products stocks have likely encountered both Universal Electronics (UEIC - Free Report) and Trimble Navigation (TRMB - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Universal Electronics and Trimble Navigation are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that UEIC is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
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.
UEIC currently has a forward P/E ratio of 9.05, while TRMB has a forward P/E of 22.10. We also note that UEIC has a PEG ratio of 0.60. 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. TRMB currently has a PEG ratio of 2.95.
Another notable valuation metric for UEIC is its P/B ratio of 1.85. 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, TRMB has a P/B of 2.98.
These metrics, and several others, help UEIC earn a Value grade of B, while TRMB has been given a Value grade of D.
UEIC sticks out from TRMB in both our Zacks Rank and Style Scores models, so value investors will likely feel that UEIC is the better option right now.