PHG or GRMN: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Electronics - Miscellaneous Products sector have probably already heard of Royal Philips (PHG) and Garmin (GRMN). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, both Royal Philips and Garmin are holding 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 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.
PHG currently has a forward P/E ratio of 20.50, while GRMN has a forward P/E of 25.25. We also note that PHG has a PEG ratio of 2.03. 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. GRMN currently has a PEG ratio of 3.71.
Another notable valuation metric for PHG is its P/B ratio of 3.72. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, GRMN has a P/B of 4.14.
These are just a few of the metrics contributing to PHG's Value grade of B and GRMN's Value grade of D.
Both PHG and GRMN are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that PHG is the superior value option right now.
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Koninklijke Philips N.V. (PHG): Free Stock Analysis Report
Garmin Ltd. (GRMN): 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.