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Is United Microelectronics Corporation (UMC) Stock Undervalued Right Now?

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...

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This story originally appeared on Zacks

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

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Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One stock to keep an eye on is United Microelectronics Corporation (UMC). UMC is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 12.19 right now. For comparison, its industry sports an average P/E of 21.57. Over the past year, UMC's Forward P/E has been as high as 20.05 and as low as 11.70, with a median of 15.01.

Investors should also note that UMC holds a PEG ratio of 0.45. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. UMC's industry has an average PEG of 0.64 right now. Over the past 52 weeks, UMC's PEG has been as high as 0.90 and as low as 0.43, with a median of 0.75.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. UMC has a P/S ratio of 3.91. This compares to its industry's average P/S of 4.54.

Finally, investors should note that UMC has a P/CF ratio of 8.87. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. UMC's current P/CF looks attractive when compared to its industry's average P/CF of 30.69. UMC's P/CF has been as high as 11.04 and as low as 5.52, with a median of 8.63, all within the past year.

These are only a few of the key metrics included in United Microelectronics Corporation's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, UMC looks like an impressive value stock at the moment.



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