CRUS vs. AMBA: Which Stock Should Value Investors Buy Now?
Investors interested in Electronics - Semiconductors stocks are likely familiar with Cirrus Logic (CRUS) 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.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, Cirrus Logic is sporting a Zacks Rank of #2 (Buy), while Ambarella has a Zacks Rank of #3 (Hold). This means that CRUS'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 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 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.
CRUS currently has a forward P/E ratio of 15.04, while AMBA has a forward P/E of 87.17. We also note that CRUS has a PEG ratio of 4.37. 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 9.78.
Another notable valuation metric for CRUS is its P/B ratio of 2.96. 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, AMBA has a P/B of 5.81.
These are just a few of the metrics contributing to CRUS's Value grade of B and AMBA's Value grade of D.
CRUS is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that CRUS is likely the superior value option right now.
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Cirrus Logic, Inc. (CRUS) : Free Stock Analysis Report
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