CTS vs. LFUS: Which Stock Is the Better Value Option?
Investors with an interest in Electronics - Miscellaneous Components stocks have likely encountered both CTS (CTS) and Littelfuse (LFUS). 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.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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.
Both CTS and Littelfuse have a Zacks Rank of #2 (Buy) right now. 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 just one piece of the puzzle 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.
CTS currently has a forward P/E ratio of 23.39, while LFUS has a forward P/E of 29.09. We also note that CTS has a PEG ratio of 1.46. 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. LFUS currently has a PEG ratio of 2.42.
Another notable valuation metric for CTS is its P/B ratio of 3.17. 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, LFUS has a P/B of 4.45.
Based on these metrics and many more, CTS holds a Value grade of B, while LFUS has a Value grade of D.
Both CTS and LFUS are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CTS is the superior value option right now.
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Free: See Our Top Stock And 4 Runners UpCTS Corporation (CTS) : Free Stock Analysis Report
Littelfuse, Inc. (LFUS) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
