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Are Investors Undervaluing Alpha and Omega Semiconductor (AOSL) Right Now?

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

Alpha and Omega Semiconductor (AOSL) is a stock many investors are watching right now. AOSL is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 9.33 right now. For comparison, its industry sports an average P/E of 13.52. Over the last 12 months, AOSL's Forward P/E has been as high as 10.87 and as low as 6.95, with a median of 9.

Finally, investors should note that AOSL has a P/CF ratio of 8.04. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. AOSL's current P/CF looks attractive when compared to its industry's average P/CF of 26.80. Over the past year, AOSL's P/CF has been as high as 10.01 and as low as 5.67, with a median of 7.84.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Alpha and Omega Semiconductor is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, AOSL feels like a great value stock at the moment.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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