Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 3 stocks made the list for top value stocks in the Computer Hardware 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 Computer Hardware 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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3 Undervalued Computer Hardware Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 3 undervalued stocks in the Computer Hardware industry for Monday, September 16, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Computer Hardware 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.

AstroNova Inc’s Value Grade

Value Grade:

AstroNova, Inc. designs, manufactures, distributes, and services a range of products that acquire, store, analyze, and present data in multiple formats. The Company operates through two segments: Product Identification (PI) and Test & Measurement (T&M;). The PI segment provides an array of digital, end-to-end product marking and identification solutions, including hardware, software, and supplies for original equipment manufacturers (OEMs), commercial printers, and brand owners. The T&M; segment provides products designed for airborne printing solutions, avionics, and data acquisition. Its aerospace products include flight deck printing solutions, networking hardware, and specialized aerospace-grade supplies. Its data acquisition systems are used in research and development, flight testing, missile and rocket telemetry production monitoring, power, and maintenance applications. The Company also offers advanced digital solutions for textiles, packaging, and labeling.

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.

AstroNova Inc has a Value Score of 64, which is considered to be undervalued.

When you look at AstroNova Inc’s price-to-sales ratio at 0.76 compared to the industry median at 0.88, this company has a lower price relative to revenue compared to its peers. This could make AstroNova Inc’s stock more attractive for value investors.

AstroNova Inc’s price-earnings ratio is 22.44 compared to the industry median at 21.02. This means it has a higher share price relative to earnings compared to its peers. This could make AstroNova Inc less attractive for value investors.

Now, let’s assess AstroNova Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 8.7, when compared to the industry median of 14.1, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

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. AstroNova Inc’s shareholder yield is lower than its industry median ratio of (0.60%). 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. AstroNova Inc’s price-to-book ratio is lower than its industry median ratio of 1.24. This could make AstroNova Inc more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at AstroNova Inc’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. AstroNova Inc’s price-to-free-cash-flow ratio is lower than its industry median ratio of 17.40. This could make AstroNova Inc more attractive because the lower P/FCF ratio indicates that AstroNova Inc is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

Hewlett Packard Enterprise Co’s Value Grade

Value Grade:

Hewlett Packard Enterprise Company is a global technology company. Its segments include Server, Hybrid Cloud, Intelligent Edge, Financial Services, and Corporate Investments and Other. Server segment consists of general-purpose servers for multi-workload computing and workload-optimized servers to deliver performance for demanding applications and integrated systems. Hybrid Cloud segment offers a variety of cloud-native and hybrid solutions across storage, private cloud and the infrastructure software-as-a-service space. Its Intelligent Edge segment offers wired and wireless local area networks, campus, branch, and data center switching, software-defined wide-area-networks, private and public cellular network software, network security, and associated services. Its Financial Services segment provides flexible investment solutions, such as leasing, financing, IT consumption, utility programs, and asset management services, for customers that facilitate technology deployment models.

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.

Hewlett Packard Enterprise Co has a Value Score of 84, which is considered to be undervalued.

Hewlett Packard Enterprise Co’s price-earnings ratio is 12.2 compared to the industry median at 21.0. This means that it has a lower price relative to its earnings compared to its peers. This makes Hewlett Packard Enterprise Co more attractive for value investors.

Hewlett Packard Enterprise Co’s price-to-book ratio is higher than its peers. This could make Hewlett Packard Enterprise Co less attractive for value investors when compared to the industry median at 1.24.

You can read more about Hewlett Packard Enterprise Co’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.

Scansource Inc’s Value Grade

Value Grade:

ScanSource, Inc. is a hybrid distributor connecting devices to the cloud and accelerating growth for customers across hardware, software as a service (SaaS), connectivity and cloud. The Company sells through multiple, specialized routes-to-market with hardware, SaaS, connectivity and cloud services offerings from the suppliers of mobility and barcode, point-of-sale (POS), payments, networking, physical security, unified communications and collaboration, telecom and cloud services. Its segments include Specialty Technology Solutions and Modern Communications & Cloud. Its Specialty Technology Solutions segment includes enterprise mobile computing, data capture, barcode printing, POS, payments, networking, cyber security and other technologies. Its Modern Communications & Cloud segment includes communications technologies and services for voice, video conferencing, wireless, data networking, cyber security, cable, unified communications and collaboration, cloud and technology services.

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.

Scansource Inc has a Value Score of 86, which is considered to be undervalued.

Scansource Inc’s price-earnings ratio is 15.3 compared to the industry median at 21.0. This means that it has a lower price relative to its earnings compared to its peers. This makes Scansource Inc more attractive for value investors.

Scansource Inc’s price-to-book ratio is lower than its peers. This could make Scansource Inc fairly attractive for value investors when compared to the industry median at 1.24.

You can read more about Scansource 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 Computer Hardware 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 Computer Hardware stocks as well as other industrys.

Choosing Which of the 3 Best Computer Hardware 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.

• AstroNova Inc stock has a Value Grade of B.
• Hewlett Packard Enterprise Co stock has a Value Grade of A.
• Scansource Inc stock has a Value Grade of A.

Now that you have a bit more background about each of the 3 undervalued stocks in the Computer Hardware 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 Computer Hardware Stocks

Want to learn more about Computer Hardware 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.

• 3 Undervalued Computer Hardware Stocks for Monday, September 16
• Why Corsair Gaming Inc’s (CRSR) Stock Is Up 7.63%
• 3 Undervalued Computer Hardware Stocks for Wednesday, September 11
• Why Super Micro Computer Inc’s (SMCI) Stock Is Up 7.92%

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.