Investors interested in stocks from the Computer - Peripheral Equipment sector have probably already heard of Alps Electric (APELY) and Mercury Systems (MRCY). 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Alps Electric has a Zacks Rank of #2 (Buy), while Mercury Systems has a Zacks Rank of #5 (Strong Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that APELY has an improving earnings outlook. However, value investors will care about much more than just this.
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 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.
APELY currently has a forward P/E ratio of 11.59, while MRCY has a forward P/E of 25.92. We also note that APELY has a PEG ratio of 3.22. 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. MRCY currently has a PEG ratio of 15.16.
Another notable valuation metric for APELY is its P/B ratio of 0.59. 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, MRCY has a P/B of 1.41.
Based on these metrics and many more, APELY holds a Value grade of B, while MRCY has a Value grade of F.
APELY stands above MRCY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that APELY is the superior value option right now.
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