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ASX vs. AMBA: Which Stock Should Value Investors Buy Now?

·2 min read

Investors interested in Electronics - Semiconductors stocks are likely familiar with ASE Technology Hldg (ASX) and Ambarella (AMBA). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, ASE Technology Hldg is sporting a Zacks Rank of #2 (Buy), while Ambarella 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 ASX has an improving earnings outlook. But this is just one factor that value investors are interested in.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.

ASX currently has a forward P/E ratio of 5.99, while AMBA has a forward P/E of 56.53. We also note that ASX has a PEG ratio of 0.26. 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. AMBA currently has a PEG ratio of 6.34.

Another notable valuation metric for ASX is its P/B ratio of 1.28. 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, AMBA has a P/B of 4.17.

Based on these metrics and many more, ASX holds a Value grade of A, while AMBA has a Value grade of F.

ASX stands above AMBA thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ASX is the superior value option right now.


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