Investors interested in stocks from the Semiconductor - General sector have probably already heard of Intel (INTC - Free Report) and STMicroelectronics (STM - 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.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Intel and STMicroelectronics are both sporting a Zacks Rank of # 2 (Buy) right now. 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 only part of the picture for value investors.
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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
INTC currently has a forward P/E ratio of 11.08, while STM has a forward P/E of 35.13. We also note that INTC has a PEG ratio of 1.48. 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. STM currently has a PEG ratio of 7.03.
Another notable valuation metric for INTC is its P/B ratio of 2.79. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, STM has a P/B of 4.34.
These metrics, and several others, help INTC earn a Value grade of A, while STM has been given a Value grade of D.
Both INTC and STM are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that INTC is the superior value option right now.