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Investors with an interest in Electronics - Semiconductors stocks have likely encountered both Silicon Motion (SIMO) and Lattice Semiconductor (LSCC). 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.
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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Silicon Motion is sporting a Zacks Rank of #2 (Buy), while Lattice Semiconductor has a Zacks Rank of #3 (Hold). This means that SIMO's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.
SIMO currently has a forward P/E ratio of 11.50, while LSCC has a forward P/E of 25.83. We also note that SIMO has a PEG ratio of 1.64. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. LSCC currently has a PEG ratio of 2.58.
Another notable valuation metric for SIMO is its P/B ratio of 2.47. 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 7.33.
Based on these metrics and many more, SIMO holds a Value grade of A, while LSCC has a Value grade of F.
SIMO stands above LSCC thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SIMO is the superior value option right now.
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