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.
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.
Right now, Micron is sporting 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. 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.
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 11.99, while AMD has a forward P/E of 51.99. We also note that MU has a PEG ratio of 0.42. 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. AMD currently has a PEG ratio of 1.20.
Another notable valuation metric for MU is its P/B ratio of 4.17. 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, AMD has a P/B of 5.52.
These are just a few of the metrics contributing to MU's Value grade of B and AMD's Value grade of D.
MU has seen stronger estimate revision activity and sports more attractive valuation metrics than AMD, so it seems like value investors will conclude that MU is the superior 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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