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INTC vs. STM: Which Stock Is the Better Value Option?

Zacks Equity Research
·2-min read

Investors interested in Semiconductor - General stocks are likely familiar with Intel (INTC) and STMicroelectronics (STM). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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, Intel is sporting a Zacks Rank of #2 (Buy), while STMicroelectronics has a Zacks Rank of #5 (Strong Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that INTC has an improving earnings outlook. But this is only part of the picture for value investors.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

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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.

INTC currently has a forward P/E ratio of 11.87, while STM has a forward P/E of 24.90. We also note that INTC has a PEG ratio of 1.58. 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. STM currently has a PEG ratio of 4.98.

Another notable valuation metric for INTC is its P/B ratio of 3.11. 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, STM has a P/B of 4.67.

These metrics, and several others, help INTC earn a Value grade of A, while STM has been given a Value grade of C.

INTC sticks out from STM in both our Zacks Rank and Style Scores models, so value investors will likely feel that INTC is the better option right now.


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Intel Corporation (INTC) : Free Stock Analysis Report
 
STMicroelectronics N.V. (STM) : Free Stock Analysis Report
 
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Zacks Investment Research