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Should Value Investors Buy NXP Semiconductors (NXPI) Stock?

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.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company to watch right now is NXP Semiconductors (NXPI). NXPI is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 13.07, which compares to its industry's average of 16.46. Over the last 12 months, NXPI's Forward P/E has been as high as 17.96 and as low as 12.13, with a median of 16.03.

NXPI is also sporting a PEG ratio of 0.65. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. NXPI's PEG compares to its industry's average PEG of 1.13. Over the past 52 weeks, NXPI's PEG has been as high as 0.90 and as low as 0.61, with a median of 0.79.

Another notable valuation metric for NXPI is its P/B ratio of 2.36. 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. This stock's P/B looks solid versus its industry's average P/B of 3.44. Within the past 52 weeks, NXPI's P/B has been as high as 3.13 and as low as 2.29, with a median of 3.

Finally, we should also recognize that NXPI has a P/CF ratio of 10.89. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. NXPI's current P/CF looks attractive when compared to its industry's average P/CF of 15.32. Within the past 12 months, NXPI's P/CF has been as high as 13.46 and as low as 9.09, with a median of 10.62.

These figures are just a handful of the metrics value investors tend to look at, but they help show that NXP Semiconductors is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, NXPI 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.


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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