Investors interested in stocks from the Electronics - Miscellaneous Products sector have probably already heard of Mistras (MG) and Teradyne (TER). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Mistras and Teradyne are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that MG likely has seen a stronger improvement to its earnings outlook than TER has recently. But this is just one piece of the puzzle for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
MG currently has a forward P/E ratio of 15.58, while TER has a forward P/E of 56.25. We also note that MG has a PEG ratio of 0.97. 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. TER currently has a PEG ratio of 2.06.
Another notable valuation metric for MG is its P/B ratio of 1.79. 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, TER has a P/B of 11.38.
Based on these metrics and many more, MG holds a Value grade of A, while TER has a Value grade of D.
MG has seen stronger estimate revision activity and sports more attractive valuation metrics than TER, so it seems like value investors will conclude that MG is the superior option right now.
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See This Stock Now for Free >>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.
