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STM or TXN: Which Is the Better Value Stock Right Now?

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Investors interested in Semiconductor - General stocks are likely familiar with STMicroelectronics (STM - Free Report) and Texas Instruments (TXN - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, STMicroelectronics has a Zacks Rank of #2 (Buy), while Texas Instruments has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that STM likely has seen a stronger improvement to its earnings outlook than TXN has recently. But this is just one piece of the puzzle 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.

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.

STM currently has a forward P/E ratio of 9.01, while TXN has a forward P/E of 17.81. We also note that STM has a PEG ratio of 1.80. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. TXN currently has a PEG ratio of 1.91.

Another notable valuation metric for STM is its P/B ratio of 2.98. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, TXN has a P/B of 10.30.

These metrics, and several others, help STM earn a Value grade of A, while TXN has been given a Value grade of C.

STM sticks out from TXN in both our Zacks Rank and Style Scores models, so value investors will likely feel that STM is the better option right now.


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