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STM vs. TXN: Which Stock Should Value Investors Buy Now?
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Investors looking for stocks in the Semiconductor - General sector might want to consider either STMicroelectronics (STM - Free Report) or Texas Instruments (TXN - 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.
Currently, STMicroelectronics has a Zacks Rank of #2 (Buy), while Texas Instruments has a Zacks Rank of #3 (Hold). This means that STM'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 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 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.
STM currently has a forward P/E ratio of 10.01, while TXN has a forward P/E of 21.82. We also note that STM has a PEG ratio of 2. 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. TXN currently has a PEG ratio of 2.34.
Another notable valuation metric for STM is its P/B ratio of 2.69. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, TXN has a P/B of 9.11.
Based on these metrics and many more, STM holds a Value grade of A, while TXN has a Value grade of D.
STM stands above TXN thanks to its solid earnings outlook, and based on these valuation figures, we also feel that STM is the superior value option right now.
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STM vs. TXN: Which Stock Should Value Investors Buy Now?
Investors looking for stocks in the Semiconductor - General sector might want to consider either STMicroelectronics (STM - Free Report) or Texas Instruments (TXN - 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.
Currently, STMicroelectronics has a Zacks Rank of #2 (Buy), while Texas Instruments has a Zacks Rank of #3 (Hold). This means that STM'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 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 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.
STM currently has a forward P/E ratio of 10.01, while TXN has a forward P/E of 21.82. We also note that STM has a PEG ratio of 2. 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. TXN currently has a PEG ratio of 2.34.
Another notable valuation metric for STM is its P/B ratio of 2.69. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, TXN has a P/B of 9.11.
Based on these metrics and many more, STM holds a Value grade of A, while TXN has a Value grade of D.
STM stands above TXN thanks to its solid earnings outlook, and based on these valuation figures, we also feel that STM is the superior value option right now.