MXL vs. MTSI: Which Stock Is the Better Value Option?

Investors interested in Semiconductor - Analog and Mixed stocks are likely familiar with MaxLinear (MXL) and M/A-Com (MTSI). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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.

Right now, both MaxLinear and M/A-Com are sporting a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. 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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

MXL currently has a forward P/E ratio of 9.81, while MTSI has a forward P/E of 19.05. We also note that MXL has a PEG ratio of 0.49. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. MTSI currently has a PEG ratio of 1.20.

Another notable valuation metric for MXL is its P/B ratio of 5.85. 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, MTSI has a P/B of 6.61.

These metrics, and several others, help MXL earn a Value grade of B, while MTSI has been given a Value grade of D.

Both MXL and MTSI are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that MXL is the superior value option right now.

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