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ADI or MXIM: Which Is the Better Value Stock Right Now?

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Investors looking for stocks in the Semiconductor - Analog and Mixed sector might want to consider either Analog Devices (ADI - Free Report) or Maxim Integrated Products . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.

Right now, Analog Devices is sporting a Zacks Rank of #2 (Buy), while Maxim Integrated Products has a Zacks Rank of #3 (Hold). This means that ADI's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.

ADI currently has a forward P/E ratio of 16.83, while MXIM has a forward P/E of 20.86. We also note that ADI has a PEG ratio of 1.36. 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. MXIM currently has a PEG ratio of 2.02.

Another notable valuation metric for ADI is its P/B ratio of 3.42. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, MXIM has a P/B of 8.70.

These are just a few of the metrics contributing to ADI's Value grade of B and MXIM's Value grade of C.

ADI sticks out from MXIM in both our Zacks Rank and Style Scores models, so value investors will likely feel that ADI is the better option right now.


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