MCHP or MPWR: Which Is the Better Value Stock Right Now?
Investors looking for stocks in the Semiconductor - Analog and Mixed sector might want to consider either Microchip Technology (MCHP) or Monolithic Power (MPWR). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, both Microchip Technology and Monolithic Power are holding a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. However, value investors will care about much more than just this.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
MCHP currently has a forward P/E ratio of 12.97, while MPWR has a forward P/E of 35.79. We also note that MCHP has a PEG ratio of 0.77. 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. MPWR currently has a PEG ratio of 1.43.
Another notable valuation metric for MCHP is its P/B ratio of 6.76. 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, MPWR has a P/B of 13.36.
These are just a few of the metrics contributing to MCHP's Value grade of B and MPWR's Value grade of D.
Both MCHP and MPWR are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that MCHP is the superior value option right now.
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Microchip Technology Incorporated (MCHP) : Free Stock Analysis Report
Monolithic Power Systems, Inc. (MPWR) : Free Stock Analysis Report
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