SIMO vs. NVMI: Which Stock Is the Better Value Option?
Investors interested in stocks from the Electronics - Semiconductors sector have probably already heard of Silicon Motion (SIMO) and Nova Ltd. (NVMI). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Silicon Motion and Nova Ltd. are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that SIMO's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.
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.
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.
SIMO currently has a forward P/E ratio of 19.24, while NVMI has a forward P/E of 25.13. We also note that SIMO has a PEG ratio of 2.75. 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. NVMI currently has a PEG ratio of 4.64.
Another notable valuation metric for SIMO is its P/B ratio of 2.77. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, NVMI has a P/B of 5.38.
Based on these metrics and many more, SIMO holds a Value grade of B, while NVMI has a Value grade of D.
SIMO has seen stronger estimate revision activity and sports more attractive valuation metrics than NVMI, so it seems like value investors will conclude that SIMO is the superior option right now.
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Silicon Motion Technology Corporation (SIMO) : Free Stock Analysis Report
Nova Ltd. (NVMI) : Free Stock Analysis Report
