Back to top

Image: Bigstock

AVGO vs. PI: Which Stock Should Value Investors Buy Now?

Read MoreHide Full Article

Investors interested in Electronics - Semiconductors stocks are likely familiar with Broadcom Inc. (AVGO) and Impinj (PI - 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.

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.

Broadcom Inc. and Impinj are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that AVGO likely has seen a stronger improvement to its earnings outlook than PI has recently. However, value investors will care about much more than just this.

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.

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.

AVGO currently has a forward P/E ratio of 13.54, while PI has a forward P/E of 2,311.50. We also note that AVGO has a PEG ratio of 1.26. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. PI currently has a PEG ratio of 115.57.

Another notable valuation metric for AVGO is its P/B ratio of 5.81. 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, PI has a P/B of 6.65.

These are just a few of the metrics contributing to AVGO's Value grade of B and PI's Value grade of F.

AVGO has seen stronger estimate revision activity and sports more attractive valuation metrics than PI, so it seems like value investors will conclude that AVGO is the superior option right now.

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

Impinj, Inc. (PI) - free report >>

Published in