Investors interested in stocks from the Semiconductor - General sector have probably already heard of Screen Holdings Co., Ltd (DINRF) and Nvidia (NVDA). 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.
Screen Holdings Co., Ltd has a Zacks Rank of #2 (Buy), while Nvidia has a Zacks Rank of #3 (Hold) right now. This means that DINRF's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.
DINRF currently has a forward P/E ratio of 11.69, while NVDA has a forward P/E of 36.35. We also note that DINRF has a PEG ratio of 1.17. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. NVDA currently has a PEG ratio of 3.80.
Another notable valuation metric for DINRF is its P/B ratio of 1.11. 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, NVDA has a P/B of 11.44.
These are just a few of the metrics contributing to DINRF's Value grade of A and NVDA's Value grade of D.
DINRF has seen stronger estimate revision activity and sports more attractive valuation metrics than NVDA, so it seems like value investors will conclude that DINRF is the superior 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
Screen Holdings Co., Ltd (DINRF) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research