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Are Investors Undervaluing STMicroelectronics (STM) Right Now?

Zacks Equity Research
Crown (CCK) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company to watch right now is STMicroelectronics (STM). STM is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 12.53, which compares to its industry's average of 16.10. Over the last 12 months, STM's Forward P/E has been as high as 25.41 and as low as 12.26, with a median of 16.93.

We should also highlight that STM has a P/B ratio of 2.98. 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. STM's current P/B looks attractive when compared to its industry's average P/B of 4.84. STM's P/B has been as high as 4.38 and as low as 2.91, with a median of 3.69, over the past year.

Finally, investors should note that STM has a P/CF ratio of 9.75. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 15.21. Over the past 52 weeks, STM's P/CF has been as high as 16.85 and as low as 9.53, with a median of 13.67.

These are just a handful of the figures considered in STMicroelectronics's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that STM is an impressive value stock right now.

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