Investors interested in Electronics - Semiconductors stocks are likely familiar with Broadcom Inc. (AVGO) and Lattice Semiconductor (LSCC). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Broadcom Inc. has a Zacks Rank of #2 (Buy), while Lattice Semiconductor 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 AVGO has an improving earnings outlook. But this is only part of the picture for value investors.
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.
AVGO currently has a forward P/E ratio of 15.26, while LSCC has a forward P/E of 50.33. We also note that AVGO has a PEG ratio of 1.27. 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. LSCC currently has a PEG ratio of 5.03.
Another notable valuation metric for AVGO is its P/B ratio of 5.52. 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, LSCC has a P/B of 11.75.
These are just a few of the metrics contributing to AVGO's Value grade of B and LSCC's Value grade of D.
AVGO has seen stronger estimate revision activity and sports more attractive valuation metrics than LSCC, so it seems like value investors will conclude that AVGO is the superior option right now.
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Broadcom Inc. (AVGO) : Free Stock Analysis Report
Lattice Semiconductor Corporation (LSCC) : Free Stock Analysis Report
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