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Investors interested in stocks from the Semiconductor - Analog and Mixed sector have probably already heard of NXP Semiconductors (NASDAQ:NXPI) and Maxim Integrated Products (NASDAQ:MXIM). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, NXP Semiconductors has a Zacks Rank of #2 (Buy), while Maxim Integrated Products has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that NXPI has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
NXPI currently has a forward P/E ratio of 9.96, while MXIM has a forward P/E of 21.04. We also note that NXPI has a PEG ratio of 1. 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. MXIM currently has a PEG ratio of 2.10.
Another notable valuation metric for NXPI is its P/B ratio of 2.32. 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, MXIM has a P/B of 7.51.
Based on these metrics and many more, NXPI holds a Value grade of B, while MXIM has a Value grade of C.
NXPI stands above MXIM thanks to its solid earnings outlook, and based on these valuation figures, we also feel that NXPI is the superior value option right now.
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