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MXL vs. MPWR: Which Stock Should Value Investors Buy Now?

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Investors interested in stocks from the Semiconductor - Analog and Mixed sector have probably already heard of MaxLinear (MXL - Free Report) and Monolithic Power (MPWR - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, MaxLinear is sporting a Zacks Rank of #2 (Buy), while Monolithic Power has a Zacks Rank of #3 (Hold). This means that MXL's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.

MXL currently has a forward P/E ratio of 12.43, while MPWR has a forward P/E of 42.69. We also note that MXL has a PEG ratio of 0.62. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. MPWR currently has a PEG ratio of 1.71.

Another notable valuation metric for MXL is its P/B ratio of 7.36. 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, MPWR has a P/B of 15.22.

These metrics, and several others, help MXL earn a Value grade of B, while MPWR has been given a Value grade of D.

MXL is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that MXL is likely the superior value option right now.


In-Depth Zacks Research for the Tickers Above


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Monolithic Power Systems, Inc. (MPWR) - free report >>

MaxLinear, Inc (MXL) - free report >>

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