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SNE or DLB: Which Is the Better Value Stock Right Now?

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Investors with an interest in Audio Video Production stocks have likely encountered both Sony and Dolby Laboratories (DLB - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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.

Sony has a Zacks Rank of #2 (Buy), while Dolby Laboratories has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that SNE is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.

SNE currently has a forward P/E ratio of 13.52, while DLB has a forward P/E of 25.28. We also note that SNE has a PEG ratio of 1.75. 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. DLB currently has a PEG ratio of 1.94.

Another notable valuation metric for SNE is its P/B ratio of 1.64. 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, DLB has a P/B of 2.48.

These metrics, and several others, help SNE earn a Value grade of A, while DLB has been given a Value grade of C.

SNE stands above DLB thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SNE is the superior value option right now.


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