Investors interested in stocks from the Technology Services sector have probably already heard of Coherent (COHR) and Symbotic Inc. (SYM). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Coherent has a Zacks Rank of #2 (Buy), while Symbotic Inc. has a Zacks Rank of #3 (Hold) right now. This means that COHR's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.
COHR currently has a forward P/E ratio of 33.25, while SYM has a forward P/E of 193.54. We also note that COHR has a PEG ratio of 0.75. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. SYM currently has a PEG ratio of 6.45.
Another notable valuation metric for COHR is its P/B ratio of 2.81. 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, SYM has a P/B of 38.76.
Based on these metrics and many more, COHR holds a Value grade of B, while SYM has a Value grade of F.
COHR has seen stronger estimate revision activity and sports more attractive valuation metrics than SYM, so it seems like value investors will conclude that COHR is the superior option right now.
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