Investors interested in stocks from the Electronics - Manufacturing Machinery sector have probably already heard of Ultra Clean Holdings (UCTT) and Entegris (ENTG). 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, Ultra Clean Holdings is sporting a Zacks Rank of #2 (Buy), while Entegris has a Zacks Rank of #5 (Strong Sell). Investors should feel comfortable knowing that UCTT likely has seen a stronger improvement to its earnings outlook than ENTG has recently. However, value investors will care about much more than just this.
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.
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.
UCTT currently has a forward P/E ratio of 21.87, while ENTG has a forward P/E of 27.26. We also note that UCTT has a PEG ratio of 0.62. 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. ENTG currently has a PEG ratio of 1.78.
Another notable valuation metric for UCTT is its P/B ratio of 1.04. 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, ENTG has a P/B of 3.21.
These metrics, and several others, help UCTT earn a Value grade of A, while ENTG has been given a Value grade of F.
UCTT has seen stronger estimate revision activity and sports more attractive valuation metrics than ENTG, so it seems like value investors will conclude that UCTT is the superior option right now.
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Ultra Clean Holdings, Inc. (UCTT): Free Stock Analysis Report Entegris, Inc. (ENTG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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