NXPI vs. MXIM: Which Stock Should Value Investors Buy Now?
Investors interested in stocks from the Semiconductor - Analog and Mixed sector have probably already heard of NXP Semiconductors (NXPI) and Maxim Integrated Products (MXIM). 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.
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.
NXP Semiconductors and Maxim Integrated Products are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that NXPI 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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
NXPI currently has a forward P/E ratio of 11.70, while MXIM has a forward P/E of 21.84. We also note that NXPI has a PEG ratio of 0.94. 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. MXIM currently has a PEG ratio of 1.87.
Another notable valuation metric for NXPI is its P/B ratio of 3.04. 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, MXIM has a P/B of 8.77.
These metrics, and several others, help NXPI earn a Value grade of B, while MXIM has been given a Value grade of C.
NXPI has seen stronger estimate revision activity and sports more attractive valuation metrics than MXIM, so it seems like value investors will conclude that NXPI is the superior option 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.