Investors interested in Electronics - Semiconductors stocks are likely familiar with Infineon Technologies AG (IFNNY) and Cirrus Logic (CRUS). 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, Infineon Technologies AG has a Zacks Rank of #2 (Buy), while Cirrus Logic 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 IFNNY has an improving earnings outlook. However, value investors will care about much more than just this.
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.
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.
IFNNY currently has a forward P/E ratio of 13.48, while CRUS has a forward P/E of 15.03. We also note that IFNNY has a PEG ratio of 0.57. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. CRUS currently has a PEG ratio of 5.52.
Another notable valuation metric for IFNNY is its P/B ratio of 2.51. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, CRUS has a P/B of 2.91.
These metrics, and several others, help IFNNY earn a Value grade of B, while CRUS has been given a Value grade of C.
IFNNY 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 IFNNY is likely the superior value option right now.
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