OSIS vs. TEL: Which Stock Is the Better Value Option?
Investors with an interest in Electronics - Miscellaneous Components stocks have likely encountered both OSI Systems (OSIS) and TE Connectivity (TEL). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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, OSI Systems is sporting a Zacks Rank of #2 (Buy), while TE Connectivity has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that OSIS 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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
OSIS currently has a forward P/E ratio of 16.55, while TEL has a forward P/E of 20.15. We also note that OSIS has a PEG ratio of 1.50. 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. TEL currently has a PEG ratio of 2.07.
Another notable valuation metric for OSIS is its P/B ratio of 2.90. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, TEL has a P/B of 3.67.
Based on these metrics and many more, OSIS holds a Value grade of B, while TEL has a Value grade of C.
OSIS stands above TEL thanks to its solid earnings outlook, and based on these valuation figures, we also feel that OSIS is the superior value option right now.
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OSI Systems, Inc. (OSIS) : Free Stock Analysis Report
TE Connectivity Ltd. (TEL) : Free Stock Analysis Report