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Will Himax Technologies Prove to be a Great Value Pick?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Himax Technologies, Inc. (HIMX - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Himax Technologies has a trailing twelve months PE ratio of 19.72. This level compares almost similarly with the market at large, as the PE ratio for the S&P 500 comes in at about 19.78.
If we focus on the long-term trend of the stock the current level puts the Himax Technologies’s current PE near its mid-point (which stands at 22.22). The stock has seen consistent period of highs in the last 1.5 years, reaching up to 80x in 2016. However, the present level seems to be an extremely suitable entry point for the stock in this respect.
Currently, the stock’s PE also compares favorably with the Zacks classified Electronics – Semiconductors industry’s trailing twelve months PE ratio, which stands at 27.21. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Himax Technologies has a forward PE ratio (price relative to this year’s earnings) of just 14.91, which is lower than the current level. Thus, it is fair to say that a slightly more value-oriented path may be ahead for Himax Technologies stock in the near term.
PS Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Himax Technologies has a P/S ratio of about 1.40. This is a much lower than the industry average, which comes in at 4.98 right now. Also, as we can see in the chart below, this is well below the highs and somewhere near the median zone for this stock in particular over the past few years.
If anything, this suggests some level of undervalued trading for HIMX—at least compared to historical norms.
Broad Value Outlook
In aggregate, Himax Technologies currently has a Zacks Value Style Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes Himax Technologies a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Himax Technologies is just 0.66, a level that is much lower than the industry average of 1.12. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, HIMX is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Himax Technologies might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘C’ and a Momentum score of ‘F’. This gives HIMX a Zacks VGM score—or its overarching fundamental grade—of ‘C’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. The current quarter has seen no estimate go higher in the past sixty days compared to five lower, while the full year estimate has seen two upward and four downward revisions in the same time period.
This has had just a mixed impact on the consensus estimate though as the current quarter consensus estimate moved down by 9.1% in the past two months, while the full year estimate remained constant. You can see the consensus estimate trend and recent price action for the stock in the chart below:
This somewhat mixed trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
Bottom Line
Himax Technologies is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front.
Notably, the Electronics – Semiconductors industry has outperformed the broader market consistently over the past two years, as you can see below:
However, though the solid Industry Rank (Top 28% out of more than 250 industries) warrants attention right now, a medium ranking (Zacks Rank #3) somewhat dims the sparkle.
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
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Will Himax Technologies Prove to be a Great Value Pick?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Himax Technologies, Inc. (HIMX - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Himax Technologies has a trailing twelve months PE ratio of 19.72. This level compares almost similarly with the market at large, as the PE ratio for the S&P 500 comes in at about 19.78.
If we focus on the long-term trend of the stock the current level puts the Himax Technologies’s current PE near its mid-point (which stands at 22.22). The stock has seen consistent period of highs in the last 1.5 years, reaching up to 80x in 2016. However, the present level seems to be an extremely suitable entry point for the stock in this respect.
Currently, the stock’s PE also compares favorably with the Zacks classified Electronics – Semiconductors industry’s trailing twelve months PE ratio, which stands at 27.21. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Himax Technologies has a forward PE ratio (price relative to this year’s earnings) of just 14.91, which is lower than the current level. Thus, it is fair to say that a slightly more value-oriented path may be ahead for Himax Technologies stock in the near term.
PS Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Himax Technologies has a P/S ratio of about 1.40. This is a much lower than the industry average, which comes in at 4.98 right now. Also, as we can see in the chart below, this is well below the highs and somewhere near the median zone for this stock in particular over the past few years.
If anything, this suggests some level of undervalued trading for HIMX—at least compared to historical norms.
Broad Value Outlook
In aggregate, Himax Technologies currently has a Zacks Value Style Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes Himax Technologies a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Himax Technologies is just 0.66, a level that is much lower than the industry average of 1.12. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, HIMX is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Himax Technologies might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘C’ and a Momentum score of ‘F’. This gives HIMX a Zacks VGM score—or its overarching fundamental grade—of ‘C’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. The current quarter has seen no estimate go higher in the past sixty days compared to five lower, while the full year estimate has seen two upward and four downward revisions in the same time period.
This has had just a mixed impact on the consensus estimate though as the current quarter consensus estimate moved down by 9.1% in the past two months, while the full year estimate remained constant. You can see the consensus estimate trend and recent price action for the stock in the chart below:
HIMAX TECH-ADR Price and Consensus
HIMAX TECH-ADR Price and Consensus | HIMAX TECH-ADR Quote
This somewhat mixed trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
Bottom Line
Himax Technologies is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front.
Notably, the Electronics – Semiconductors industry has outperformed the broader market consistently over the past two years, as you can see below:
However, though the solid Industry Rank (Top 28% out of more than 250 industries) warrants attention right now, a medium ranking (Zacks Rank #3) somewhat dims the sparkle.
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>