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UMC or GFS: Which Is the Better Value Stock Right Now?

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Investors interested in Electronics - Semiconductors stocks are likely familiar with United Microelectronics Corporation (UMC - Free Report) and GlobalFoundries Inc. (GFS - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Currently, United Microelectronics Corporation has a Zacks Rank of #2 (Buy), while GlobalFoundries Inc. has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that UMC has an improving earnings outlook. 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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

UMC currently has a forward P/E ratio of 10.91, while GFS has a forward P/E of 26.91. We also note that UMC has a PEG ratio of 4.53. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. GFS currently has a PEG ratio of 8.41.

Another notable valuation metric for UMC is its P/B ratio of 2.02. 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, GFS has a P/B of 3.42.

Based on these metrics and many more, UMC holds a Value grade of B, while GFS has a Value grade of C.

UMC stands above GFS thanks to its solid earnings outlook, and based on these valuation figures, we also feel that UMC is the superior value option right now.


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