Are Investors Undervaluing Super Micro Computer (SMCI) Right Now?

An image of stock prices rising and declining in value Credit: Shutterstock photo

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

Super Micro Computer (SMCI) is a stock many investors are watching right now. SMCI is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 6.77 right now. For comparison, its industry sports an average P/E of 10.62. SMCI's Forward P/E has been as high as 14.02 and as low as 6.54, with a median of 10.77, all within the past year.

Investors should also note that SMCI holds a PEG ratio of 0.52. 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. SMCI's industry has an average PEG of 0.69 right now. Over the past 52 weeks, SMCI's PEG has been as high as 1.07 and as low as 0.50, with a median of 0.80.

Finally, our model also underscores that SMCI has a P/CF ratio of 9.97. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 11.42. Over the past 52 weeks, SMCI's P/CF has been as high as 16.73 and as low as 9.52, with a median of 13.17.

These are just a handful of the figures considered in Super Micro Computer's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that SMCI is an impressive value stock right now.

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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.

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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