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TEL vs. NJDCY: Which Stock Should Value Investors Buy Now?

Zacks

Investors looking for stocks in the Electronics – Miscellaneous Components sector might want to consider either TE Connectivity (TEL) or Nidec Corp. (NJDCY). But which of these two companies is the best option for those looking for undervalued stocks? Let’s take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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, TE Connectivity has a Zacks Rank of #2 (Buy), while Nidec Corp. has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that TEL likely has seen a stronger improvement to its earnings outlook than NJDCY has recently. 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 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.

TEL currently has a forward P/E ratio of 16.17, while NJDCY has a forward P/E of 26.35. We also note that TEL has a PEG ratio of 1.51. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company’s expected EPS growth rate. NJDCY currently has a PEG ratio of 1.62.

Another notable valuation metric for TEL is its P/B ratio of 3.04. The P/B is a method of comparing a stock’s market value to its book value, which is defined as total assets minus total liabilities. By comparison, NJDCY has a P/B of 4.44.

These are just a few of the metrics contributing to TEL’s Value grade of A and NJDCY’s Value grade of D.

TEL sticks out from NJDCY in both our Zacks Rank and Style Scores models, so value investors will likely feel that TEL is the better option right now.


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Zacks Investment Research
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