Investors interested in Electronics - Semiconductors stocks are likely familiar with GlobalFoundries Inc. (GFS) 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.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
GlobalFoundries Inc. and Lattice Semiconductor are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that GFS is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle 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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
GFS currently has a forward P/E ratio of 19.70, while LSCC has a forward P/E of 58.38. We also note that GFS has a PEG ratio of 0.85. 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 1.69.
Another notable valuation metric for GFS is its P/B ratio of 1.56. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, LSCC has a P/B of 12.15.
Based on these metrics and many more, GFS holds a Value grade of B, while LSCC has a Value grade of F.
GFS sticks out from LSCC in both our Zacks Rank and Style Scores models, so value investors will likely feel that GFS is the better option right now.
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GlobalFoundries Inc. (GFS): Free Stock Analysis Report Lattice Semiconductor Corporation (LSCC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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