Investors with an interest in Electronics - Miscellaneous Components stocks have likely encountered both Vishay Precision (VPG) 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.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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, Vishay Precision has a Zacks Rank of #2 (Buy), while Universal Display Corp. has a Zacks Rank of #5 (Strong Sell). Investors should feel comfortable knowing that VPG likely has seen a stronger improvement to its earnings outlook than OLED has recently. But this is just one piece of the puzzle 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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
VPG currently has a forward P/E ratio of 14.76, while OLED has a forward P/E of 83.51. We also note that VPG has a PEG ratio of 0.74. 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 2.78.
Another notable valuation metric for VPG is its P/B ratio of 1.90. 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, OLED has a P/B of 6.73.
These metrics, and several others, help VPG earn a Value grade of B, while OLED has been given a Value grade of F.
VPG stands above OLED thanks to its solid earnings outlook, and based on these valuation figures, we also feel that VPG is the superior value option right now.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.