Investors interested in Electronics - Miscellaneous Products stocks are likely familiar with Daktronics (DAKT) and MKS (MKSI). 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Daktronics is sporting a Zacks Rank of #2 (Buy), while MKS has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that DAKT is likely seeing its earnings outlook improve to a greater extent. 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 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 17.20, while MKSI has a forward P/E of 21.24. We also note that DAKT has a PEG ratio of 0.57. 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. MKSI currently has a PEG ratio of 1.66.
Another notable valuation metric for DAKT is its P/B ratio of 3.2. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, MKSI has a P/B of 4.18.
Based on these metrics and many more, DAKT holds a Value grade of A, while MKSI has a Value grade of C.
DAKT is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that DAKT is likely the superior value option right now.
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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.
