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Is Alpha and Omega Semiconductor (AOSL) Stock Undervalued Right Now?

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The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

Alpha and Omega Semiconductor (AOSL - Free Report) is a stock many investors are watching right now. AOSL is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock holds a P/E ratio of 12.37, while its industry has an average P/E of 23.35. Over the last 12 months, AOSL's Forward P/E has been as high as 20.63 and as low as 7.51, with a median of 11.33.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. AOSL has a P/S ratio of 1.9. This compares to its industry's average P/S of 3.86.

Finally, investors should note that AOSL has a P/CF ratio of 11.10. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 35.95. Over the past year, AOSL's P/CF has been as high as 17.01 and as low as 6.10, with a median of 9.56.

Value investors will likely look at more than just these metrics, but the above data helps show that Alpha and Omega Semiconductor is likely undervalued currently. And when considering the strength of its earnings outlook, AOSL sticks out at as one of the market's strongest value stocks.


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