Investors with an interest in Electronics - Semiconductors stocks have likely encountered both Infineon Technologies AG (IFNNY) and Nova Ltd. (NVMI). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, both Infineon Technologies AG and Nova Ltd. are holding a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is just one factor that value investors are interested in.
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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
IFNNY currently has a forward P/E ratio of 17.66, while NVMI has a forward P/E of 20.83. We also note that IFNNY has a PEG ratio of 1.43. 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. NVMI currently has a PEG ratio of 1.46.
Another notable valuation metric for IFNNY is its P/B ratio of 1.99. 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, NVMI has a P/B of 5.46.
These metrics, and several others, help IFNNY earn a Value grade of B, while NVMI has been given a Value grade of C.
Both IFNNY and NVMI are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that IFNNY is the superior value option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Infineon Technologies AG (IFNNY): Free Stock Analysis Report Nova Ltd. (NVMI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
