DAKT vs. GRMN: Which Stock Is the Better Value Option?
Investors looking for stocks in the Electronics - Miscellaneous Products sector might want to consider either Daktronics (DAKT) or Garmin (GRMN). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, both Daktronics and Garmin are sporting a Zacks Rank of #2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is only part of the picture for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.
DAKT currently has a forward P/E ratio of 14.48, while GRMN has a forward P/E of 27.91. We also note that DAKT has a PEG ratio of 0.58. 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. GRMN currently has a PEG ratio of 3.14.
Another notable valuation metric for DAKT is its P/B ratio of 2.72. 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, GRMN has a P/B of 6.01.
These metrics, and several others, help DAKT earn a Value grade of A, while GRMN has been given a Value grade of D.
Both DAKT and GRMN are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that DAKT is the superior value option right now.
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Garmin Ltd. (GRMN) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
