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ON vs. MTSI: Which Stock Should Value Investors Buy Now?

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Investors with an interest in Semiconductor - Analog and Mixed stocks have likely encountered both ON Semiconductor Corp. (ON) and M/A-Com (MTSI). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

ON Semiconductor Corp. has a Zacks Rank of #2 (Buy), while M/A-Com has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that ON has an improving earnings outlook. But this is just one piece of the puzzle for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.

ON currently has a forward P/E ratio of 19.91, while MTSI has a forward P/E of 31.85. We also note that ON has a PEG ratio of 0.37. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. MTSI currently has a PEG ratio of 0.80.

Another notable valuation metric for ON is its P/B ratio of 5.60. 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, MTSI has a P/B of 10.43.

These are just a few of the metrics contributing to ON's Value grade of B and MTSI's Value grade of C.

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


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ON Semiconductor Corporation (ON) : Free Stock Analysis Report
 
MACOM Technology Solutions Holdings, Inc. (MTSI) : Free Stock Analysis Report
 
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