ON vs. NXPI: Which Stock Should Value Investors Buy Now?
ON vs. NXPI: Which Stock Is the Better Value Option?
Investors with an interest in Semiconductor - Analog and Mixed stocks have likely encountered both ON Semiconductor Corp. (ON) and NXP Semiconductors (NXPI). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Both ON Semiconductor Corp. and NXP Semiconductors have a Zacks Rank of # 2 (Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. 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.
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.
ON currently has a forward P/E ratio of 17.93, while NXPI has a forward P/E of 20.20. We also note that ON has a PEG ratio of 0.33. 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. NXPI currently has a PEG ratio of 2.02.
Another notable valuation metric for ON is its P/B ratio of 5.08. 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, NXPI has a P/B of 7.20.
Based on these metrics and many more, ON holds a Value grade of B, while NXPI has a Value grade of D.
Both ON and NXPI are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ON is the superior value option right now.
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ON Semiconductor Corporation (ON): Free Stock Analysis Report
NXP Semiconductors N.V. (NXPI): Free Stock Analysis Report
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