Investors seeking value-driven opportunities within the Electronics – Miscellaneous Products sector might find themselves drawn to both Daikin Industries (DKILY) and Hoya Corp. (HOCPY). But which of these contenders truly holds the edge for value-conscious investors? To uncover the answer, we’ll delve deeper into their profiles, analyzing their respective strengths and comparing key metrics.
Our methodology for identifying compelling value propositions involves pairing an impressive score in the Value category of our Style Scores system with a robust Zacks Rank. The Zacks Rank is a time-tested strategy that emphasizes companies exhibiting positive earnings estimate revisions, while our Style Scores meticulously grade companies based on specific characteristics.
Currently, both Daikin Industries and Hoya Corp. boast a Zacks Rank of #2 (Buy), signifying that both companies have witnessed upward revisions in earnings estimates, offering investors confidence in their improving earnings outlook. This positive trend is a significant factor for value investors, but it’s only one piece of the puzzle.
Value investors are also deeply interested in a set of well-established valuation metrics that help determine if a company is undervalued at its current share price. The Value category within our Style Scores system identifies undervalued companies by scrutinizing several key metrics, including the widely used P/E ratio, P/S ratio, earnings yield, cash flow per share, and various other fundamentals. These metrics collectively guide us in establishing a company’s fair value.
DKILY currently sports a forward P/E ratio of 22.16, while HOCPY has a forward P/E of 40.73. Additionally, DKILY boasts a PEG ratio of 2.14. This metric mirrors the familiar P/E ratio but incorporates the stock’s projected earnings growth rate. HOCPY’s current PEG ratio sits at 2.88. Another noteworthy valuation metric for DKILY is its P/B ratio of 2.18. The P/B ratio contrasts a stock’s market value against its book value, which is calculated as total assets minus total liabilities. For comparison, HOCPY’s P/B stands at 7.76.
These are just a few of the metrics contributing to DKILY’s Value grade of B and HOCPY’s Value grade of D. While both DKILY and HOCPY are impressive stocks with robust earnings outlooks, based on these valuation figures, we believe that DKILY represents the superior value choice at this juncture.
