Investors with an interest in Electronics - Miscellaneous Products stocks have likely encountered both Daktronics (DAKT) and Rockwell Automation (ROK). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 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.
Daktronics has a Zacks Rank of #1 (Strong Buy), while Rockwell Automation has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that DAKT likely has seen a stronger improvement to its earnings outlook than ROK has recently. However, value investors will care about much more than just this.
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.
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.
DAKT currently has a forward P/E ratio of 19.26, while ROK has a forward P/E of 34.68. We also note that DAKT has a PEG ratio of 0.64. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. ROK currently has a PEG ratio of 3.62.
Another notable valuation metric for DAKT is its P/B ratio of 3.69. 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, ROK has a P/B of 10.65.
Based on these metrics and many more, DAKT holds a Value grade of B, while ROK has a Value grade of D.
DAKT stands above ROK thanks to its solid earnings outlook, and based on these valuation figures, we also feel that DAKT is the superior value option right now.
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Rockwell Automation, Inc. (ROK) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
