Investors interested in stocks from the Electronics - Semiconductors sector have probably already heard of Cirrus Logic (CRUS - Free Report) and Pixelworks (PXLW - 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.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Both Cirrus Logic and Pixelworks have a Zacks Rank of # 2 (Buy) right now. 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 piece of the puzzle for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.
CRUS currently has a forward P/E ratio of 12.35, while PXLW has a forward P/E of 63.78. We also note that CRUS has a PEG ratio of 0.82. 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. PXLW currently has a PEG ratio of 3.19.
Another notable valuation metric for CRUS is its P/B ratio of 2.13. 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, PXLW has a P/B of 4.17.
These metrics, and several others, help CRUS earn a Value grade of B, while PXLW has been given a Value grade of D.
Both CRUS and PXLW are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CRUS is the superior value option right now.