Investors with an interest in Semiconductor – General stocks have likely encountered both Intel (INTC) and STMicroelectronics (STM). But which of these two stocks offers value investors a better bang for their buck right now? We’ll need to take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Intel has a Zacks Rank of #2 (Buy), while STMicroelectronics has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that INTC likely has seen a stronger improvement to its earnings outlook than STM 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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company’s fair value.
INTC currently has a forward P/E ratio of 12.46, while STM has a forward P/E of 41.96. We also note that INTC has a PEG ratio of 1.66. 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. STM currently has a PEG ratio of 8.39.
Another notable valuation metric for INTC is its P/B ratio of 3.33. The P/B is a method of comparing a stock’s market value to its book value, which is defined as total assets minus total liabilities. By comparison, STM has a P/B of 3.79.
These are just a few of the metrics contributing to INTC’s Value grade of B and STM’s Value grade of D.
INTC 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 INTC is likely the superior value option right now.
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