Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 7 stocks made the list for top value stocks in the Communications & Networking industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Why Focus on Undervalued Communications & Networking Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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7 Undervalued Communications & Networking Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 7 undervalued stocks in the Communications & Networking industry for Monday, April 15, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Communications & Networking industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Adtran Holdings Inc’s Value Grade

Value Grade:

ADTRAN Holdings, Inc. is a provider of networking and communications platforms, software, and services focused on the broadband access market. It operates through two segments: Network Solutions segment, which includes hardware and software products, and Services & Support segment, which includes a portfolio of network design and implementation services, support services and cloud-hosted software-as-a-service (SaaS) applications. The two segments span across Subscriber Solutions, Access & Aggregation Solutions, and Optical Networking Solutions. Its Subscriber Solutions portfolio is used by service providers to terminate their access services infrastructure at the customer's premises. Access & Aggregation Solutions are solutions that are used by communications service providers to connect subscribers. Optical Networking Solutions are used by communications service providers, Internet content providers and large enterprises to securely interconnect metro and regional networks over fiber.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Adtran Holdings Inc has a Value Score of 99, which is considered to be undervalued.

When you look at Adtran Holdings Inc’s price-to-sales ratio at 0.32 compared to the industry median at 1.18, this company has a lower price relative to revenue compared to its peers. This could make Adtran Holdings Inc’s stock more attractive for value investors.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Adtran Holdings Inc’s shareholder yield is higher than its industry median ratio of (0.54%). Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Adtran Holdings Inc’s price-to-book ratio is lower than its industry median ratio of 1.77. This could make Adtran Holdings Inc more attractive to investors looking for a new addition to their portfolio.

Telefonaktiebolaget LM Ericsson - ADR’s Value Grade

Value Grade:

Telefonaktiebolaget LM Ericsson (Ericsson) provides infrastructure, services and software to the telecommunication industry and other sectors. The Company's segments include Networks, IT & Cloud and Media. The Networks segment consists of two business units: Network Products and Network Services. The overall focus is on evolving and managing access networks, including the development of hardware and software for radio access and transport networks. The IT & Cloud business includes two business units: IT & Cloud Products and IT & Cloud Services. The focus in IT & Cloud is to help telecom operators and selected enterprises through the digital transformations ahead. It develops and delivers software-based solutions for television and media and combines a product portfolio that spans the television value chain, with systems integration and managed services. The portfolio includes compression, content publishing through set-top box or pure over-the-top, content delivery and analytics.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Telefonaktiebolaget LM Ericsson - ADR has a Value Score of 80, which is considered to be undervalued.

Telefonaktiebolaget LM Ericsson - ADR’s price-to-book ratio is lower than its peers. This could make Telefonaktiebolaget LM Ericsson - ADR fairly attractive for value investors when compared to the industry median at 1.77.

You can read more about Telefonaktiebolaget LM Ericsson - ADR’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Microwave Filter Company Inc’s Value Grade

Value Grade:

Microwave Filter Company, Inc. (MFC) is engaged in the designing, development, and manufacturing of filter products. MFC offers products, which covers the frequency range from 5 Hz to 50 GHz for customers around the world. Its custom designs include waveguide, stripline/microstrip, lumped element, dielectric resonator, and cavity/coaxial topologies. Its Filter types and accessories include bandpass, bandstop, combiners, couplers, diplexers, highpass, lowpass and adaptors. MFC also offers a complete line of CATV headend channel deletion filters and networks, bandpass filters and diplexers for wireless and PCS applications; interference filters for C-Band installations; and its team is involved in a number of programs, including communications, broadcast and CATV operators and installers, military/aerospace facilities, universities and government research labs, wireless cable multi-channel, multi-point manufacturers, and distribution systems, and C-band and Ku-band satellite systems.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Microwave Filter Company Inc has a Value Score of 92, which is considered to be undervalued.

Microwave Filter Company Inc’s price-earnings ratio is 12.3 compared to the industry median at 21.1. This means that it has a lower price relative to its earnings compared to its peers. This makes Microwave Filter Company Inc more attractive for value investors.

Microwave Filter Company Inc’s price-to-book ratio is higher than its peers. This could make Microwave Filter Company Inc less attractive for value investors when compared to the industry median at 1.77.

You can read more about Microwave Filter Company Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Resideo Technologies Inc’s Value Grade

Value Grade:

Resideo Technologies, Inc. is a manufacturer and developer of technology-driven products and solutions. Its segments include Products and Solutions and ADI Global Distribution. The Products and Solutions segment offers temperature and humidity control, thermal and combustion solutions, water and indoor air quality solutions, smoke and carbon monoxide detection home safety products and fire suppression products, security panels, sensors, peripherals, communications devices, video cameras, other home-related lifestyle convenience solutions, cloud infrastructure, installation and maintenance tools, and related software. The ADI Global Distribution segment is a wholesale distributor of low-voltage security products including security, fire, access control and video products, and participates significantly in the broader related markets of smart home, access control, power, audio, ProAV, networking, communications, wire and cable, enterprise connectivity, and structured wiring products.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Resideo Technologies Inc has a Value Score of 83, which is considered to be undervalued.

Resideo Technologies Inc’s price-earnings ratio is 14.9 compared to the industry median at 21.1. This means that it has a lower price relative to its earnings compared to its peers. This makes Resideo Technologies Inc more attractive for value investors.

Resideo Technologies Inc’s price-to-book ratio is higher than its peers. This could make Resideo Technologies Inc less attractive for value investors when compared to the industry median at 1.77.

You can read more about Resideo Technologies Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Silicom Ltd’s Value Grade

Value Grade:

Silicom Ltd. (Silicom) is engaged in the design, manufacture, marketing and support of networking and data infrastructure solutions for a range of servers, server-based systems and communications devices. The Company's products include server network interface cards with and without bypass (Server Adapters); Intelligent and programmable cards, with features, such as encryption, acceleration, data compression, redirection, time stamping, network capture solutions, field programmable gate array (FPGA) based ultra-low latency solutions, and/or other offload features and/or compute blades (Smart Cards), and standalone Products. The Company's market segments for its products include network appliances; servers; data storage, including Big Data; The Cloud, virtualized data centers, with and without software-defined networking (SDN), and Internet of Things (IOT).

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Silicom Ltd has a Value Score of 83, which is considered to be undervalued.

Silicom Ltd’s price-to-book ratio is higher than its peers. This could make Silicom Ltd less attractive for value investors when compared to the industry median at 1.77.

You can read more about Silicom Ltd’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Viasat Inc’s Value Grade

Value Grade:

ViaSat, Inc. is a global communications company. Its segments include satellite services, commercial networks and government systems. The satellite services segment provides satellite-based broadband and related services to residential customers, prepaid Internet users, enterprises, commercial airlines and other mobile broadband customers. The commercial networks segment develops and offers advanced satellite and wireless broadband platforms, ground networking equipment, radio frequency and advanced microwave solutions, application-specific integrated circuit (ASIC) chip design, satellite payload development and space-to-earth connectivity systems. The government systems segment provides global mobile broadband services to military and government users and develops and offers network-centric, Internet protocol (IP)-based fixed and mobile secure communications products and solutions. The Company also holds a multi-layered, global spectrum portfolio, covering L-band, Ka-band, and S-band.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Viasat Inc has a Value Score of 62, which is considered to be undervalued.

Viasat Inc’s price-to-book ratio is higher than its peers. This could make Viasat Inc less attractive for value investors when compared to the industry median at 1.77.

You can read more about Viasat Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Westell Technologies Inc.’s Value Grade

Value Grade:

Westell Technologies, Inc. is a holding company, which conducts business through its subsidiary, Westell, Inc. (Westell). Westell designs, manufactures and distributes telecommunications solutions, which are sold to telephone companies. The Company's segments include In-Building Wireless (IBW), Intelligent Site Management (ISM), and Communications Network Solutions (CNS). The IBW segment solutions enable public safety and cellular coverage in stadiums, arenas, malls, buildings, and other indoor areas not served well by the existing outdoor radio network. The ISM segment solutions include a suite of remote units, which provide machine-to-machine communications that enable operators to remotely monitor, manage, and control physical site infrastructure and support systems. The CNS segment solutions include a range of hardened network infrastructure offerings suitable for both indoor and outdoor use. The offerings consist of integrated cabinets, power distribution products and others.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Westell Technologies Inc. has a Value Score of 97, which is considered to be undervalued.

Westell Technologies Inc.’s price-earnings ratio is 7.0 compared to the industry median at 21.1. This means that it has a lower price relative to its earnings compared to its peers. This makes Westell Technologies Inc. more attractive for value investors.

Westell Technologies Inc.’s price-to-book ratio is higher than its peers. This could make Westell Technologies Inc. less attractive for value investors when compared to the industry median at 1.77.

You can read more about Westell Technologies Inc.’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Communications & Networking Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Communications & Networking stocks as well as other industrys.

Choosing Which of the 7 Best Communications & Networking Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Adtran Holdings Inc stock has a Value Grade of A.
• Telefonaktiebolaget LM Ericsson - ADR stock has a Value Grade of B.
• Microwave Filter Company Inc stock has a Value Grade of A.
• Resideo Technologies Inc stock has a Value Grade of A.
• Silicom Ltd stock has a Value Grade of A.
• Viasat Inc stock has a Value Grade of B.
• Westell Technologies Inc. stock has a Value Grade of A.

Now that you have a bit more background about each of the 7 undervalued stocks in the Communications & Networking industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Communications & Networking Stocks

Want to learn more about Communications & Networking stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 7 Undervalued Communications & Networking Stocks for Monday, April 15
• 5 Undervalued Communications & Networking Stocks for Friday, April 12
• Why Arista Networks Inc’s (ANET) Stock Is Down 8.55%
• Why Infinera Corp’s (INFN) Stock Is Down 6.08%

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.