Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Amkor Technology, Inc. AMKR stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Amkor Technology has a trailing twelve months PE ratio of 14.7, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 20.7. While Amkor Technology’s current PE level puts it above its midpoint of 11.6 over the past five years, the current level stands significantly lower than the highs for the stock, suggesting that it could be a solid entry point.
Further, the stock’s PE compares favorably with the Zacks Computer & Technology sector’s trailing twelve months PE ratio, which stands at 22.6. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Amkor Technology has a P/S ratio of about 0.7. This is much lower than the S&P 500 average, which comes in at 3.4 right now.
Broad Value Outlook
In aggregate, Amkor Technology currently has a Value Score of A, putting it into the top 20% of all stocks we cover from this look. This makes Amkor Technology a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the P/CF ratio (another great indicator of value) for Amkor Technology is just 3.6, a level that is far lower than the industry average of 15.6. The Clearly, AMKR is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Amkor Technology might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth Score of B and a Momentum Score of D. This gives AMKR a Zacks VGM score — or its overarching fundamental grade — of A. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been slightly discouraging as both the current quarter and full year estimates have seen one downward revision each in the past 60 days, compared with no upward revisions in the same time-frame.
This has had a negative impact on the consensus estimate though as the current quarter consensus estimate has tumbled 20.8% in the past two months, while the full year estimate has inched lower by 3.8%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Amkor Technology, Inc. Price and Consensus
Amkor Technology, Inc. Price and Consensus | Amkor Technology, Inc. Quote
Given these bearish trends, the stock has just a Zacks Rank #3 (Hold) which indicates why we are looking for in-line performance from the company in the near term.
Amkor Technology is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Despite having a Zacks Rank #3, the stock belongs to an industry which is ranked among the Top 44% of more than 250 industries, which indicates that broader factors are favorable for the company. Further, over the past two years, the industry has clearly outperformed the broader market, as you can see below:
So, value investors might want to wait for estimates to turn around in this name first, but once that happens, this stock could be a compelling pick.
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Amkor Technology, Inc. (AMKR) : Free Stock Analysis Report
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