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

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Investors interested in Electronics - Semiconductors stocks are likely familiar with United Microelectronics Corporation (UMC - Free Report) and Lattice Semiconductor (LSCC - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, both United Microelectronics Corporation and Lattice Semiconductor are holding a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. 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.

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 13.86, while LSCC has a forward P/E of 79.55. We also note that UMC has a PEG ratio of 0.49. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. LSCC currently has a PEG ratio of 7.95.

Another notable valuation metric for UMC is its P/B ratio of 3.24. 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, LSCC has a P/B of 28.28.

These metrics, and several others, help UMC earn a Value grade of B, while LSCC has been given a Value grade of F.

Both UMC and LSCC are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that UMC is the superior value option right now.


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