Investors with an interest in Electronics – Miscellaneous Components stocks have likely encountered both OSI Systems (OSIS) and Nidec Corp. (NJDCY). But which of these two stocks offers value investors a better bang for their buck right now? We’ll need to 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
OSI Systems and Nidec Corp. are sporting Zacks Ranks of #1 (Strong Buy) and #4 (Sell), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that OSIS is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
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.
OSIS currently has a forward P/E ratio of 22.26, while NJDCY has a forward P/E of 34.27. We also note that OSIS has a PEG ratio of 1.78. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company’s expected earnings growth rate. NJDCY currently has a PEG ratio of 1.93.
Another notable valuation metric for OSIS is its P/B ratio of 3.26. 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 4.08.
These are just a few of the metrics contributing to OSIS’s Value grade of B and NJDCY’s Value grade of F.
OSIS has seen stronger estimate revision activity and sports more attractive valuation metrics than NJDCY, so it seems like value investors will conclude that OSIS is the superior option right now.
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