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Should Value Investors Buy TDK (TTDKY) Stock?

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to...

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This story originally appeared on Zacks

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

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Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

TDK (TTDKY) is a stock many investors are watching right now. TTDKY is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 14.70, which compares to its industry's average of 21.73. Over the past year, TTDKY's Forward P/E has been as high as 21.85 and as low as 12.21, with a median of 15.61.

Investors should also note that TTDKY holds a PEG ratio of 0.97. 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. TTDKY's PEG compares to its industry's average PEG of 1.90. TTDKY's PEG has been as high as 1.27 and as low as 0.50, with a median of 0.76, all within the past year.

Investors should also recognize that TTDKY has a P/B ratio of 1.60. 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. This company's current P/B looks solid when compared to its industry's average P/B of 4.06. TTDKY's P/B has been as high as 2.55 and as low as 1.30, with a median of 1.69, over the past year.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. TTDKY has a P/S ratio of 1.06. This compares to its industry's average P/S of 1.69.

Finally, we should also recognize that TTDKY has a P/CF ratio of 6.55. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 19.52. Over the past year, TTDKY's P/CF has been as high as 12.18 and as low as 5.32, with a median of 7.72.

These figures are just a handful of the metrics value investors tend to look at, but they help show that TDK is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, TTDKY feels like a great value stock at the moment.



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