Investors looking for stocks in the Electronics - Semiconductors sector might want to consider either Cirrus Logic (CRUS - Free Report) or 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.
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.
Right now, Cirrus Logic is sporting a Zacks Rank of #1 (Strong Buy), while Lattice Semiconductor has a Zacks Rank of #2 (Buy). This means that CRUS's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
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.
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.
CRUS currently has a forward P/E ratio of 21.69, while LSCC has a forward P/E of 29.50. We also note that CRUS has a PEG ratio of 1.45. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. LSCC currently has a PEG ratio of 2.36.
Another notable valuation metric for CRUS is its P/B ratio of 2.54. 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, LSCC has a P/B of 6.72.
These metrics, and several others, help CRUS earn a Value grade of B, while LSCC has been given a Value grade of D.
CRUS is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that CRUS is likely the superior value option right now.