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UMC vs. NVMI: Which Stock Is the Better Value Option?

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Investors interested in stocks from the Electronics - Semiconductors sector have probably already heard of United Microelectronics Corporation (UMC - Free Report) and Nova Measuring Instruments (NVMI - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

United Microelectronics Corporation has a Zacks Rank of #2 (Buy), while Nova Measuring Instruments has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that UMC likely has seen a stronger improvement to its earnings outlook than NVMI has recently. However, value investors will care about much more than just this.

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.

UMC currently has a forward P/E ratio of 16.38, while NVMI has a forward P/E of 34.13. We also note that UMC has a PEG ratio of 0.84. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. NVMI currently has a PEG ratio of 1.77.

Another notable valuation metric for UMC is its P/B ratio of 3.05. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, NVMI has a P/B of 7.18.

Based on these metrics and many more, UMC holds a Value grade of B, while NVMI has a Value grade of D.

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


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