Investors with an interest in Electronics - Miscellaneous Products stocks have likely encountered both Mistras (MG) and Teradyne (TER). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, both Mistras and Teradyne are sporting 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 just one factor that value investors are interested in.
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.
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.
MG currently has a forward P/E ratio of 14.88, while TER has a forward P/E of 58.13. We also note that MG has a PEG ratio of 0.93. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. TER currently has a PEG ratio of 2.13.
Another notable valuation metric for MG is its P/B ratio of 1.71. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, TER has a P/B of 11.76.
These metrics, and several others, help MG earn a Value grade of A, while TER has been given a Value grade of D.
Both MG and TER are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that MG is the superior value option right now.
Zacks' Research Chief Picks Stock Most Likely to "At Least Double"
Our experts have revealed their Top 5 recommendations with money-doubling potential – and Director of Research Sheraz Mian believes one is superior to the others. Of course, all our picks aren’t winners but this one could far surpass earlier recommendations like Hims & Hers Health, which shot up +209%.
See Our Top Stock to Double (Plus 4 Runners Up) >>Mistras Group Inc (MG) : Free Stock Analysis Report
Teradyne, Inc. (TER) : 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.
