OSIS vs. OLED: Which Stock Is the Better Value Option?
Investors interested in stocks from the Electronics - Miscellaneous Components sector have probably already heard of OSI Systems (OSIS) and Universal Display Corp. (OLED). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Both OSI Systems and Universal Display Corp. have a Zacks Rank of # 2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is only part of the picture for value investors.
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.
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.
OSIS currently has a forward P/E ratio of 20.94, while OLED has a forward P/E of 61.59. We also note that OSIS has a PEG ratio of 1.68. 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. OLED currently has a PEG ratio of 2.05.
Another notable valuation metric for OSIS is its P/B ratio of 3.35. 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, OLED has a P/B of 11.47.
These are just a few of the metrics contributing to OSIS's Value grade of B and OLED's Value grade of F.
Both OSIS and OLED are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that OSIS is the superior value option right now.
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