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NXP Semiconductors N.V. (NXPI) - free report >>
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NXP Semiconductors N.V. (NXPI) - free report >>
MACOM Technology Solutions Holdings, Inc. (MTSI) - free report >>
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NXPI or MTSI: Which Is the Better Value Stock Right Now?
Investors with an interest in Semiconductor - Analog and Mixed stocks have likely encountered both NXP Semiconductors (NXPI - Free Report) and M/A-Com (MTSI - 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
NXP Semiconductors and M/A-Com are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that NXPI has an improving earnings outlook. But this is just one factor that value investors are interested in.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.
NXPI currently has a forward P/E ratio of 14.68, while MTSI has a forward P/E of 22.39. We also note that NXPI has a PEG ratio of 0.67. 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. MTSI currently has a PEG ratio of 1.41.
Another notable valuation metric for NXPI is its P/B ratio of 7.47. 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, MTSI has a P/B of 7.98.
These are just a few of the metrics contributing to NXPI's Value grade of B and MTSI's Value grade of C.
NXPI has seen stronger estimate revision activity and sports more attractive valuation metrics than MTSI, so it seems like value investors will conclude that NXPI is the superior option right now.