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MXL vs. MPWR: Which Stock Is the Better Value Option?

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Investors interested in Semiconductor - Analog and Mixed stocks are likely familiar with MaxLinear (MXL - Free Report) and Monolithic Power (MPWR - 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.

Right now, both MaxLinear and Monolithic Power are sporting a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is only part of the picture for value investors.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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 7.72, while MPWR has a forward P/E of 29.25. We also note that MXL has a PEG ratio of 0.39. 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 1.17.

Another notable valuation metric for MXL is its P/B ratio of 4.44. 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, MPWR has a P/B of 12.08.

Based on these metrics and many more, MXL holds a Value grade of B, while MPWR has a Value grade of D.

Both MXL and MPWR are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that MXL is the superior value option right now.


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

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