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ASX vs. AMBA: Which Stock Should Value Investors Buy Now?

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Investors with an interest in Electronics - Semiconductors stocks have likely encountered both ASE Technology Hldg (ASX - Free Report) and Ambarella (AMBA - 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.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Right now, ASE Technology Hldg is sporting a Zacks Rank of #2 (Buy), while Ambarella has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ASX is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.

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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

ASX currently has a forward P/E ratio of 12.08, while AMBA has a forward P/E of 144.55. We also note that ASX has a PEG ratio of 3.99. 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. AMBA currently has a PEG ratio of 10.13.

Another notable valuation metric for ASX is its P/B ratio of 1.32. 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, AMBA has a P/B of 3.72.

These metrics, and several others, help ASX earn a Value grade of A, while AMBA has been given a Value grade of F.

ASX stands above AMBA thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ASX is the superior value option right now.


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ASE Technology Holding Co., Ltd. (ASX) - free report >>

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