For investors seeking value in the Electronics – Miscellaneous Components sector, two names likely come to mind: TDK Corp. (TTDKY) and nVent Electric (NVT). But which of these companies offers the more compelling value proposition? To answer this, we need to delve deeper into their financial performance and valuation.
Our analysis begins with a combination of the Zacks Rank and our Style Scores, specifically the Value category. The Zacks Rank focuses on stocks exhibiting strong earnings estimate revision trends, indicating positive analyst sentiment. The Value Style Score, on the other hand, highlights companies with specific traits that appeal to value investors.
At present, TDK Corp. boasts a Zacks Rank of #1 (Strong Buy), while nVent Electric holds a Zacks Rank of #3 (Hold). This signals that TTDKY’s earnings estimate revisions have been more positive, suggesting a more optimistic outlook from analysts. However, this is just one piece of the puzzle for value investors.
Value investors often rely on traditional, time-tested metrics to identify undervalued stocks. Our Value Style Score incorporates several key fundamental indicators, such as the widely used P/E ratio, P/S ratio, earnings yield, cash flow per share, and other relevant metrics commonly employed by value investors.
TDKY currently sports a forward P/E ratio of 16.19, compared to NVT’s forward P/E of 19.01. Additionally, TTDKY possesses a PEG ratio of 0.58. This metric, similar to the P/E ratio, incorporates a company’s expected EPS growth rate. NVT’s PEG ratio, on the other hand, stands at 1.19. Another notable valuation metric is the P/B ratio, which compares a company’s market value to its book value (total assets minus total liabilities). TTDKY’s P/B ratio comes in at 2.20, while NVT’s P/B ratio is 3.14.
These metrics, and several others, contribute to TTDKY earning a Value grade of B, whereas NVT receives a Value grade of C. With its improving earnings outlook and favorable valuation metrics, TDK Corp. emerges as the more likely superior value option at this juncture.
