Investors interested in stocks from the Electronics - Miscellaneous Products sector have probably already heard of Daktronics (DAKT) and KLA (KLAC). But which of these two companies is the best option for those looking for undervalued stocks? 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.
Daktronics and KLA are sporting Zacks Ranks of #1 (Strong Buy) and #2 (Buy), respectively, right now. Investors should feel comfortable knowing that DAKT likely has seen a stronger improvement to its earnings outlook than KLAC has recently. But this is just one piece of the puzzle 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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
DAKT currently has a forward P/E ratio of 11.93, while KLAC has a forward P/E of 24.62. We also note that DAKT has a PEG ratio of 0.40. 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. KLAC currently has a PEG ratio of 1.42.
Another notable valuation metric for DAKT is its P/B ratio of 2.61. 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, KLAC has a P/B of 28.63.
Based on these metrics and many more, DAKT holds a Value grade of A, while KLAC has a Value grade of D.
DAKT sticks out from KLAC in both our Zacks Rank and Style Scores models, so value investors will likely feel that DAKT is the better option right now.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
