Investors with an interest in Computer - Integrated Systems stocks have likely encountered both Micron (MU) and Advanced Micro Devices (AMD). 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Micron has a Zacks Rank of #1 (Strong Buy), while Advanced Micro Devices has a Zacks Rank of #3 (Hold). This means that MU's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst 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.
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.
MU currently has a forward P/E ratio of 13.69, while AMD has a forward P/E of 65.58. We also note that MU has a PEG ratio of 0.48. 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. AMD currently has a PEG ratio of 1.88.
Another notable valuation metric for MU is its P/B ratio of 4.6. 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, AMD has a P/B of 7.02.
These are just a few of the metrics contributing to MU's Value grade of B and AMD's Value grade of D.
MU sticks out from AMD in both our Zacks Rank and Style Scores models, so value investors will likely feel that MU is the better 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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