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KN vs. VCRA: Which Stock Is the Better Value Option?

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Investors interested in stocks from the Communication - Components sector have probably already heard of Knowles (KN - Free Report) and Vocera Communications . 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Knowles has a Zacks Rank of #2 (Buy), while Vocera Communications has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that KN likely has seen a stronger improvement to its earnings outlook than VCRA has recently. But this is just one factor that value investors are interested in.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

KN currently has a forward P/E ratio of 14.18, while VCRA has a forward P/E of 77.35. We also note that KN has a PEG ratio of 1.42. 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. VCRA currently has a PEG ratio of 5.33.

Another notable valuation metric for KN is its P/B ratio of 1.37. 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, VCRA has a P/B of 10.73.

These are just a few of the metrics contributing to KN's Value grade of B and VCRA's Value grade of D.

KN is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that KN is likely the superior value option right now.


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