Investors with an interest in Semiconductor - Analog and Mixed stocks have likely encountered both ON Semiconductor Corp. (ON) and Monolithic Power (MPWR). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Right now, ON Semiconductor Corp. is sporting a Zacks Rank of #2 (Buy), while Monolithic Power has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that ON likely has seen a stronger improvement to its earnings outlook than MPWR has recently. But this is just one factor that value investors are interested in.
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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
ON currently has a forward P/E ratio of 21.69, while MPWR has a forward P/E of 55.29. We also note that ON has a PEG ratio of 2.51. 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. MPWR currently has a PEG ratio of 2.74.
Another notable valuation metric for ON is its P/B ratio of 2.59. 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, MPWR has a P/B of 13.63.
These metrics, and several others, help ON earn a Value grade of B, while MPWR has been given a Value grade of F.
ON sticks out from MPWR in both our Zacks Rank and Style Scores models, so value investors will likely feel that ON is the better option right now.
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ON Semiconductor Corporation (ON): Free Stock Analysis Report Monolithic Power Systems, Inc. (MPWR): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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