Investors with an interest in Electronics - Semiconductors stocks have likely encountered both Rambus (RMBS - Free Report) and Lattice Semiconductor (LSCC - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, both Rambus and Lattice Semiconductor are holding a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is only part of the picture 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.
RMBS currently has a forward P/E ratio of 10.31, while LSCC has a forward P/E of 19.70. We also note that RMBS has a PEG ratio of 1.03. 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. LSCC currently has a PEG ratio of 1.71.
Another notable valuation metric for RMBS is its P/B ratio of 1.01. 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, LSCC has a P/B of 3.84.
These are just a few of the metrics contributing to RMBS's Value grade of A and LSCC's Value grade of D.
Both RMBS and LSCC are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that RMBS is the superior value option right now.