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MACOM Technology Solutions Holdings, Inc. (MTSI) - free report >>
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MACOM Technology Solutions Holdings, Inc. (MTSI) - free report >>
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ON vs. MTSI: Which Stock Should Value Investors Buy Now?
Investors with an interest in Semiconductor - Analog and Mixed stocks have likely encountered both ON Semiconductor Corp. (ON - Free Report) and M/A-Com (MTSI - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, both ON Semiconductor Corp. and M/A-Com are sporting a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one factor that value investors are interested in.
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.
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.
ON currently has a forward P/E ratio of 12.94, while MTSI has a forward P/E of 21. We also note that ON has a PEG ratio of 0.50. 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. MTSI currently has a PEG ratio of 1.30.
Another notable valuation metric for ON is its P/B ratio of 5.25. 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, MTSI has a P/B of 6.92.
Based on these metrics and many more, ON holds a Value grade of B, while MTSI has a Value grade of D.
Both ON and MTSI are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ON is the superior value option right now.