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INTC or TXN: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Semiconductor - General sector have probably already heard of Intel (INTC - Free Report) and Texas Instruments (TXN - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Intel has a Zacks Rank of #2 (Buy), while Texas Instruments has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that INTC likely has seen a stronger improvement to its earnings outlook than TXN has recently. 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.
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.
INTC currently has a forward P/E ratio of 12.51, while TXN has a forward P/E of 23.12. We also note that INTC has a PEG ratio of 1.67. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. TXN currently has a PEG ratio of 2.28.
Another notable valuation metric for INTC is its P/B ratio of 3.38. 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 12.36.
These metrics, and several others, help INTC earn a Value grade of A, while TXN has been given a Value grade of D.
INTC has seen stronger estimate revision activity and sports more attractive valuation metrics than TXN, so it seems like value investors will conclude that INTC is the superior option right now.