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MX or MPWR: Which Is the Better Value Stock Right Now?

Zacks Equity Research
·2-min read

Investors with an interest in Semiconductor - Analog and Mixed stocks have likely encountered both Magnachip (MX) and Monolithic Power (MPWR). 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.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Magnachip and Monolithic Power 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 MX has an improving earnings outlook. But this is only part of the picture for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

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The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

MX currently has a forward P/E ratio of 19.81, while MPWR has a forward P/E of 26.37. We also note that MX has a PEG ratio of 0.73. 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. MPWR currently has a PEG ratio of 1.05.

Another notable valuation metric for MX is its P/B ratio of 0.96. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, MPWR has a P/B of 10.88.

Based on these metrics and many more, MX holds a Value grade of A, while MPWR has a Value grade of D.

MX sticks out from MPWR in both our Zacks Rank and Style Scores models, so value investors will likely feel that MX is the better option right now.


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Magnachip Semiconductor Corp. (MX) : Free Stock Analysis Report
 
Monolithic Power Systems, Inc. (MPWR) : Free Stock Analysis Report
 
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Zacks Investment Research