Investors interested in Computer - Integrated Systems stocks are likely familiar with Micron (MU) and Advanced Micro Devices (AMD). But which of these two stocks presents investors with the better value opportunity right now? 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Micron has a Zacks Rank of #1 (Strong Buy), while Advanced Micro Devices 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 MU has an improving earnings outlook. However, value investors will care about much more than just this.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.
MU currently has a forward P/E ratio of 10.95, while AMD has a forward P/E of 54.68. We also note that MU has a PEG ratio of 0.38. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. AMD currently has a PEG ratio of 2.02.
Another notable valuation metric for MU is its P/B ratio of 3.76. 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, AMD has a P/B of 5.85.
These metrics, and several others, help MU earn a Value grade of B, while AMD has been given a Value grade of D.
MU 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 MU is likely the superior value option right now.
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Micron Technology, Inc. (MU): Free Stock Analysis Report Advanced Micro Devices, Inc. (AMD): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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