UMC vs. GFS: Which Stock Is the Better Value Option?
Investors interested in stocks from the Electronics - Semiconductors sector have probably already heard of United Microelectronics Corporation (UMC) and GlobalFoundries Inc. (GFS). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, United Microelectronics Corporation has a Zacks Rank of #2 (Buy), while GlobalFoundries Inc. has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that UMC likely has seen a stronger improvement to its earnings outlook than GFS has recently. But this is just one piece of the puzzle for value investors.
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 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.
UMC currently has a forward P/E ratio of 12.85, while GFS has a forward P/E of 28.59. We also note that UMC has a PEG ratio of 4.48. 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. GFS currently has a PEG ratio of 5.05.
Another notable valuation metric for UMC is its P/B ratio of 1.92. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, GFS has a P/B of 1.97.
These metrics, and several others, help UMC earn a Value grade of B, while GFS has been given a Value grade of C.
UMC sticks out from GFS in both our Zacks Rank and Style Scores models, so value investors will likely feel that UMC is the better option right now.
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United Microelectronics Corporation (UMC) : Free Stock Analysis Report
GlobalFoundries Inc. (GFS) : Free Stock Analysis Report