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

By Zacks Investment ResearchStock MarketsMar 10, 2020 11:40PM ET

www.investing.com/analysis/asx-vs-amba-which-stock-should-value-investors-buy-now-200515167

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

By Zacks Investment Research | Mar 10, 2020 11:40PM ET

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Investors interested in Electronics - Semiconductors stocks are likely familiar with ASE Technology Hldg (ASX) and Ambarella (AMBA). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 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.

ASE Technology Hldg has a Zacks Rank of #2 (Buy), while Ambarella has a Zacks Rank of #4 (Sell) right now. Investors should feel comfortable knowing that ASX likely has seen a stronger improvement to its earnings outlook than AMBA has recently. But this is just one piece of the puzzle 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.

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 12.83, while AMBA has a forward P/E of 114.73. We also note that ASX has a PEG ratio of 4.24. 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. AMBA currently has a PEG ratio of 8.04.

Another notable valuation metric for ASX is its P/B ratio of 1.44. 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 3.49.

Based on these metrics and many more, ASX holds a Value grade of A, while AMBA has a Value grade of F.

ASX sticks out from AMBA in both our Zacks Rank and Style Scores models, so value investors will likely feel that ASX is the better option right now.

Advanced Semiconductor Engineering, Inc. (ASX): Free Stock Analysis Report

Ambarella, Inc. (AMBA): Free Stock Analysis Report

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

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