Investors with an interest in Electronics - Miscellaneous Components stocks have likely encountered both nVent Electric (NVT) and Nidec Corp. (NJDCY). But which of these two stocks presents investors with the better value opportunity right now? 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, both nVent Electric and Nidec Corp. 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 piece of the puzzle for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.
NVT currently has a forward P/E ratio of 13.76, while NJDCY has a forward P/E of 50.54. We also note that NVT has a PEG ratio of 2.87. 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. NJDCY currently has a PEG ratio of 3.99.
Another notable valuation metric for NVT is its P/B ratio of 1.22. 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, NJDCY has a P/B of 5.07.
Based on these metrics and many more, NVT holds a Value grade of A, while NJDCY has a Value grade of D.
Both NVT and NJDCY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that NVT is the superior value option right now.
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nVent Electric PLC (NVT): Free Stock Analysis Report
Nidec Corp. (NJDCY): Free Stock Analysis Report
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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.