UMC or GFS: Which Is the Better Value Stock Right Now?
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Investors interested in Electronics - Semiconductors stocks are likely familiar with United Microelectronics Corporation (UMC) and GlobalFoundries Inc. (GFS). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, United Microelectronics Corporation has a Zacks Rank of #2 (Buy), while GlobalFoundries Inc. has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that UMC has an improving earnings outlook. But this is just one factor that value investors are interested in.
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 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.
UMC currently has a forward P/E ratio of 12.18, while GFS has a forward P/E of 28.63. We also note that UMC has a PEG ratio of 4.24. 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. GFS currently has a PEG ratio of 5.05.
Another notable valuation metric for UMC is its P/B ratio of 1.82. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, GFS has a P/B of 1.97.
These metrics, and several others, help UMC earn a Value grade of A, while GFS has been given a Value grade of C.
UMC has seen stronger estimate revision activity and sports more attractive valuation metrics than GFS, so it seems like value investors will conclude that UMC is the superior option right now.
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United Microelectronics Corporation (UMC) : Free Stock Analysis Report
GlobalFoundries Inc. (GFS) : Free Stock Analysis Report