Investors looking for stocks in the Electronics - Testing Equipment sector might want to consider either Teradyne (TER) or Agilent Technologies (A). But which of these two stocks presents investors with the better value opportunity right now? 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, both Teradyne and Agilent Technologies are holding a Zacks Rank of # 2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. 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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
TER currently has a forward P/E ratio of 18.08, while A has a forward P/E of 26.23. We also note that TER has a PEG ratio of 1.37. 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. A currently has a PEG ratio of 2.44.
Another notable valuation metric for TER is its P/B ratio of 4.24. 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, A has a P/B of 4.96.
Based on these metrics and many more, TER holds a Value grade of A, while A has a Value grade of D.
Both TER and An are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that TER is the superior value option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Teradyne, Inc. (TER): Free Stock Analysis Report Agilent Technologies, Inc. (A): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research