Investors interested in stocks from the Electronics - Semiconductors sector have probably already heard of ASE Technology Hldg (ASX - Free Report) and Lattice Semiconductor (LSCC - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? 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 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.
Currently, ASE Technology Hldg has a Zacks Rank of #2 (Buy), while Lattice Semiconductor has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that ASX likely has seen a stronger improvement to its earnings outlook than LSCC has recently. However, value investors will care about much more than just this.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
ASX currently has a forward P/E ratio of 12.05, while LSCC has a forward P/E of 45.93. We also note that ASX has a PEG ratio of 0.45. 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 4.59.
Another notable valuation metric for ASX is its P/B ratio of 1.34. 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 10.82.
Based on these metrics and many more, ASX holds a Value grade of A, while LSCC has a Value grade of F.
ASX stands above LSCC thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ASX is the superior value option right now.