Yahoo Finance GFS or AMBA: Which Is the Better Value Stock Right Now?
Investors with an interest in Electronics - Semiconductors stocks have likely encountered both GlobalFoundries Inc. (GFS) and Ambarella (AMBA). 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.
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 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, GlobalFoundries Inc. is sporting a Zacks Rank of #2 (Buy), while Ambarella has a Zacks Rank of #3 (Hold). This means that GFS's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
GFS currently has a forward P/E ratio of 20.59, while AMBA has a forward P/E of 83.92. We also note that GFS has a PEG ratio of 0.43. 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. AMBA currently has a PEG ratio of 9.42.
Another notable valuation metric for GFS is its P/B ratio of 3.62. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, AMBA has a P/B of 5.59.
These are just a few of the metrics contributing to GFS's Value grade of B and AMBA's Value grade of F.
GFS stands above AMBA thanks to its solid earnings outlook, and based on these valuation figures, we also feel that GFS is the superior value option right now.
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GlobalFoundries Inc. (GFS) : Free Stock Analysis Report
Ambarella, Inc. (AMBA) : Free Stock Analysis Report
