Investors with an interest in Electronics - Miscellaneous Components stocks have likely encountered both Zagg (ZAGG) and TE Connectivity (TEL). 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Right now, Zagg is sporting a Zacks Rank of #2 (Buy), while TE Connectivity has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that ZAGG likely has seen a stronger improvement to its earnings outlook than TEL has recently. 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.
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.
ZAGG currently has a forward P/E ratio of 7.31, while TEL has a forward P/E of 14.76. We also note that ZAGG has a PEG ratio of 0.97. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. TEL currently has a PEG ratio of 1.38.
Another notable valuation metric for ZAGG is its P/B ratio of 2.09. 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, TEL has a P/B of 2.66.
Based on these metrics and many more, ZAGG holds a Value grade of A, while TEL has a Value grade of C.
ZAGG is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that ZAGG is likely the superior value option right now.
ZAGG Inc (ZAGG): Free Stock Analysis Report
TE Connectivity Ltd. (NYSE:TEL
Original post