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SIMO vs. NVMI: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
·2 min read

Investors with an interest in Electronics - Semiconductors stocks have likely encountered both Silicon Motion (SIMO) and Nova Ltd. (NVMI). 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.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.

Right now, Silicon Motion is sporting a Zacks Rank of #2 (Buy), while Nova Ltd. has a Zacks Rank of #3 (Hold). This means that SIMO's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

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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.

SIMO currently has a forward P/E ratio of 7.73, while NVMI has a forward P/E of 15.62. We also note that SIMO has a PEG ratio of 0.86. 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. NVMI currently has a PEG ratio of 3.26.

Another notable valuation metric for SIMO is its P/B ratio of 3.06. 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, NVMI has a P/B of 4.08.

Based on these metrics and many more, SIMO holds a Value grade of B, while NVMI has a Value grade of D.

SIMO is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that SIMO is likely the superior value option right now.


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Silicon Motion Technology Corporation (SIMO) : Free Stock Analysis Report
 
Nova Ltd. (NVMI) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research